A widely followed gauge of future economic activity fell for the second straight month during August as consumer confidence sagged even before Hurricane Katrina (search) struck the Gulf Coast.

The Conference Board (search) said Thursday its Index of Leading Economic Indicators (search) fell 0.2 percent last month to 137.6. July's slight increase was revised to a small decrease and there were downward revisions to previous months.

The private research group said consumer expectations, on of the components of the index, fell during August. The data for the index, collected before Katrina's devastation, is consistent with the economy continuing to expand more moderately in the near term, the Conference Board said.

But Katrina was likely to send future LEI readings lower.

"Even before Katrina we saw a big runup in energy prices. September is going to be very weak. It is going to show the impact of Katrina," said Stephen Stanley, chief economist at RBS Greenwich Capital Markets.

The research group's coincident index, a measure of current economic activity, increased in August. This index has been increasing at a 2.5 percent annual rate since April 2003, but its growth rate has moderated in recent months.

"The leading economic indicators began to lose a little momentum before the hurricanes and flooding," Ken Goldstein, The Conference Board's labor economist, said in a statement. "Domestically, business investment appeared to be headed toward a moderate pace in the third quarter."

The Conference Board said five of 10 indicators that make up the leading index rose in August. These included manufacturers' new orders for nondefense capital goods, manufacturers' new orders for consumer goods and materials as well as stock prices.

Negatives sapping the index included activity in building permits as well as the consumer confidence.