A closely watched gauge of future economic activity declined slightly in February following a sharp rise in January, a private research group said Monday.

The decline suggested to some economists that the nation's economic growth will slow in the second half of the year.

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The Conference Board said its Index of Leading Economic Indicators fell 0.2 percent in February, following a revised 0.5 percent rise in January. The January increase had initially been reported at 1.1 percent.

Economists on Wall Street had expected the index to have declined 0.3 percent in February.

The Conference Board said its coincident index, a measure of the current economy, rose 0.3 percent in February, following no change in January and a 0.4 percent increase in December.

In the latest report, the largest negative components were consumer expectations, building permits and stock prices. The positive components included manufacturers' new orders for non-defense capital goods and orders for consumer goods and materials.

"Essentially the story is we have got moderate growth through the first quarter. We may tick up in the second quarter and we may tick down in the third quarter," Ken Goldstein, economist at The Conference Board told The Associated Press. "Growth is going to be a little slower second half of the year."

Frank Nothaft, chief economist at the mortgage consolidator Freddie Mac, said some of the growth anticipated for the first half of the year is related to reconstruction efforts amid regions hurt by hurricanes last year.

"This pumps more money into the economy, spurring growth," he said, adding that the slowdown in the later half of 2006 would reflect the series of interest rate increases engineered by the Federal Reserve.

The U.S. central bank, concerned about inflation that could hobble the economy, has raised interest rates 14 times since June 2004. The series of rate increases have effectively raised borrowing costs for consumers and businesses.

The higher rates have already had some impact on housing where sales of homes have slowed and economists believe the Fed will raise rates again later this month.

When it comes to the sharp downward revision in January's leading economic indicators, economists at High Frequency Economics Ltd. said the data may have been skewed by a drop in aircraft orders not taken into consideration when the January report was first published.

"The January revision is mostly due to the plunge in aircraft orders reported in the durable goods numbers," according to the report from High Frequency Economics. "The durables report was not available when the LEI was compiled, so the Conference Board assumed orders for nondefense capital goods were unchanged."

U.S. stocks were mixed in late morning trading. The Dow Jones Industrial Average slipped 2.72 to 11,276.93 while the Nasdaq composite index rose 3.71 to 2,310.19.

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