By Xavier Fontdegloria

An economic index that measures U.S. business cycles rose in September for the fifth straight month, but its expansion pace further decelerated, data from the Conference Board showed Thursday.

The Leading Economic index came in at 107.2 in September, up 0.7% compared with the prior month. Economists polled by The Wall Street Journal expected the reading to increase at a roughly similar pace of 0.6%.

In August, the index rose by an upwardly revised 1.4% compared with July.

September reading marks the fifth straight month rise for the index, which registered in March the steepest monthly decline ever amid the first wave of the coronavirus pandemic. After rebounding in May and June, the indicator has gradually slowed down.

"The decelerating pace of improvement suggests the US economy could be losing momentum heading into the final quarter of 2020," Conference Board Senior Director of Economic Research Ataman Ozyildirim said.

The Conference Board Leading Economic Index is based on 10 components, among them initial claims for unemployment insurance, manufacturers' new orders, building permits of new private housing units, stock prices and consumers expectations. It is intended to signal swings in the business cycle and to smooth out some of the volatility of individual indicators.

The increase in September was driven primarily by declining unemployment claims and rising housing permits.

The U.S. economy is projected to expand in the fourth quarter but downside risks to the recovery may be increasing amid rising new cases of Covid-19 and continued labor market weakness, Mr. Ozyildirim said.

The Coincident Economic Index rose 0.2% in September to 101.7, while the Lagging Economic Index decreased 0.1% to 107.6, data from the Conference Board showed.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

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(END) Dow Jones Newswires

October 22, 2020 10:24 ET (14:24 GMT)

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