The government's main gauge of future economic activity declined 0.2 percent in December, the Commerce Department said yesterday, indicating that the economic rebound may not be as strong as originally expected.
The Commerce Department also revised downward the index of leading economic indicators for the previous two months, contributing to the belief among some analysts that recent economic forecasts may have been too optimistic.
The December decline in the index -- which foreshadows economic activity six to nine months into the future -- was the fifth decline in the past seven months. The index ended the year only 0.9 percent higher than the previous December after rising 16 percent in 1983.
The December decline, and the downward revisions of the indicators in October and November, contrasted sharply with a recent report on the fourth-quarter gross national product that showed a marked pickup in economic growth at the end of the year.
The White House dismissed the December leading indicators report, saying that the one-month decline "does not cause us any concern at all. The economy remains exceptionally strong."
Commerce Department Undersecretary Sidney L. Jones said that although the index has been erratic in the past few months, "the year ended with renewed upward momentum in economic activity."
The leading indicators increased 0.6 percent in November following a 0.6 percent decline in October, the Commerce Department said. Commerce originally had estimated a 1.3 percent increase in November and a 0.5 percent decline in October.
Other statistics reported yesterday were somewhat mixed, but still pointed toward moderate growth, although with little chance of a recession, economists said. New orders for manufactured goods dropped 0.7 percent in December, following a 4.5 percent rise in November. However, sales of new single-family homes rose 3.1 percent in December, following a 9.8 percent decline in November.
Meanwhile, the nation's major retailers said yesterday that their December results were mixed, with some merchandisers reporting lackluster sales and others posting significant gains.
Economists said there were signs that consumer spending may be on the rise again and sustain the economic expansion during the first half of the year, although purchases by businesses, which grew strongly last year, have slowed considerably.
Economists had interpreted the leap in GNP -- which measures output in goods and services -- from a 1.6 percent rate of growth in the third quarter to 3.9 percent in the fourth quarter as a sign that growth would pick up sharply during the first half of this year.
However, after yesterday's report of the indicators, some economists said growth may not be quite so robust as forecast several weeks ago and that much of the improvement in fourth-quarter GNP had resulted from a sharp reduction in imports, a phenomenon not expected to occur this quarter.
One of the 11 indicators available for December that was positive was manufacturers' new orders for consumer goods and materials, which has shown upward momentum in the last few months. The rise in this indicator, along with economic data showing an improvement in Americans' income and a high level of saving, pointed toward a renewed surge in consumer buying, economists said.
"Whatever strength there is will be coming through the consumer," said Edward Friedman, a senior economist at Chase Econometrics. "The consumer will be the source of growth over the next half year."
Two other key indicators that declined -- contracts and orders for plant and equipment, and net business formation -- both fell twice in the last three months, also suggesting that businesses' contribution to economic activity this year may be subsiding, economists said.
Allen Sinai, chief economist for Shearson Lehman/American Express, said that the December data were inconclusive and that some components tend to be very volatile. The weakness in the two key business indicators probably reflects a return to more normal levels of capital spending after the surge last year, he said.
"The ambiguity is whether the big decline in the indicators is due to a slower pace of capital outlays or a downturn in capital outlays," Sinai said.
The other indicators that declined were vendor performance -- a measure of the speed of deliveries to businesses -- stock prices, and building permits.
The other indicators that made positive contributions to the index were the money supply, average workweek, average weekly initial claims for state unemployment insurance, change in credit outstanding and change in the prices of sensitive materials.