The smoothed composite index dipped 0.3% in February after a 0.1% gain in January.

Ststacan - Overall, 4 of the 10 components increased and 6 decreased. Most of the weakness originated in a sharp contraction of manufacturing, especially autos, at the turn of the year.

Household demand improved across the board. Spending on durable goods rose modestly, even before the reduction in the goods and services tax rate gave a further boost to auto purchases in January. The housing index fell as lower existing home sales offset higher housing starts in both January and February.

The stock market continued to trend down, although the unsmoothed index in February recovered all of its losses in January. Higher commodity prices led firms to plan more business investment in 2008, especially in energy and metal mines. Strong business demand was reflected in the growth of services employment in February.

The leading indicator for the United States fell 0.2%, after revisions aggravated its declines late in 2007. Continued weakness in housing and consumer confidence also helped lower the stock market in the United States.

Manufacturing contracted at year-end, driven by a sharp drop in auto output. Long-planned retooling of auto plants accounted for the bulk of this decline, aggravated by cuts in response to slower car sales in the United States. As a result, orders, shipments and the average workweek all tumbled.