The index of U.S. leading indicators unexpectedly declined in March for the first time in seven months, a sign the worlds largest economy will cool.

The Conference Boards gauge of the outlook for the next three to six months fell 0.1% in March after climbing 0.5% in the prior two months, the New York-based group said today. The median forecast of economists surveyed by Bloomberg called for a 0.1% increase.

The figures underscore an economy that hit a rough patch at the end of the first quarter as manufacturing eased and higher payrolls taxes began to bite. At the same time, advancing stock prices this year and lower borrowing costs will help keep household spending, which accounts for about 70% of the economy, from faltering.

Its lackluster-to-moderate growth in the near-term, said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, who correctly projected the drop in the LEI. The tax increases and federal budget cuts are a drag, he said. The economy is not quite as strong as wed like to see.

Estimates of 48 economists in the Bloomberg survey ranged from a decline of 0.4% to an increase of 0.6%.

Philadelphia Manufacturing

The Federal Reserve Bank of Philadelphia said today that its factory index declined in April to 1.3 from 2 the prior month. Readings greater than zero signal expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware. The median forecast called for 3.

Stocks fell after earnings from UnitedHealth Group Inc. and EBay Inc. disappointed investors. The Standard & Poors 500 Index decreased 0.1% to 1,550.35 at 10:53 a.m. in New York.

Another report showed little change in the number of Americans filing for unemployment benefits. First-time jobless claims climbed by 4,000 to 352,000 in the week ended April 13, the Labor Department said.

Businesses at least need the workers they have and probably could use some more, said Tom Simons, an economist at Jefferies LLC in New York, who projected claims would rise to 350,000. Claims will probably stay in this range for some time.

Five of the 10 indicators in the leading index contributed to the March decrease, including a decline in applications for home construction, fewer factory orders and a drop in consumer expectations. Building permits in March fell 3.9% to a four-month low 902,000 annualized rate, the Commerce Department said this week.