Though still expanding, some of our statistical indicators show troubling signs of weakness.

Weakness among the primary leading indicators of business-cycle conditions shows that the recovery has not gained much momentum in recent months. Although all but one of the leaders are appraised as either expanding or probably expanding, more than half of the most recent data points show them falling or flat.

There are some positive signs among the leaders. New orders for core capital goods rose by 3.8 percent due to increased demand for machinery. (This series and other dollar-denominated series are adjusted for price inflation.) This indicates that manufacturers may be planning to increase production in the coming months. Supporting this view is the steady increase in the ratio of manufacturing and trade sales to inventories, which has now almost rebounded back to its pre-recession level.

New housing permits increased by over 2 percent, primarily due to increases in permits for apartment buildings in the Northeast. Meanwhile, permits for singlefamily homes—which account for nearly three-fourths of all permits—fell to a 14-month low. The federal home buyer credit was extended, with some restrictions, to September 30, which could help boost demand.