The government's main economic forecasting gauge plunged 1.0 percent in February, its steepest drop in nine months, the government said Tuesday. But analysts said the decrease was misleading. The Commerce Department said Tuesday its latest Index of Leading Economic Indicators _ designed to forecast economic activity six to nine months in advance _ wiped out three months of increases with the largest decline since a 1.1 percent fall last May. But analysts said the report was an aberation caused by a record 25 percent drop in building permits in February from January's 26.8 percent gain as builders took advantage of warm weather and tried to beat deadlines for new government regulations. ``It would have been down just 0.2 percent without the distorting effect of the building permits,'' said David Jones, an economist with Aubrey G. Lanston & Co., a government securities dealer in New York. Gilbert Benz, an economist with the Swiss Bank Corp. in New York, said the gauge would bounce back next month to its levels of late 1989 and early 1990. The index rose 0.1 percent in November, 0.4 percent in December and 0.2 percent in January. Nevertheless, seven of the 11 statistics in the index were down which analysts interpreted as meaning a soft economy, particularly in the manufacturing sector. ``February's leading indicators show a substantial industrial rebound is unlikely to occur in the next six months,'' said William K. MacReynolds, forecasting director for the U.S. Chamber of Commerce. But Jones added, ``Recent signals suggest that while the goods-producing sector is still flat, it's not getting any worse and there's no evidence that its weakness is spreading to other sectors.'' According to a recent survey of 51 top economists by Blue Chip Economic Indicators in Sedona, Ariz., the gross national product _ the nation's output of goods and services _ will avoid a recession and grow 1.7 percent in 1990. But the survey concluded that the economic outlook ``remains the most sluggish since the recession year of 1982.'' The economy grew 3 percent last year, although it slowed to 1.1 percent in the final quarter. In addition to building permits, other statistics contributing to the index's decline in February were faster business delivery times, lower stock prices, a decline in plant and equipment orders, a decrease in the price of raw materials, a decline in the backlog of manufacturers' unfilled orders and a drop in an index measuring consumer confidence. Three of the components were positive, including an increase in orders for consumer goods, a gain in the money supply and a drop in weekly unemployment claims. One indicator, the length of the average workweek, was unchanged. The various changes left the index at 144.0 percent of its 1982 base of 100. The index fell 0.6 percent from September through February after declining 0.5 percent the previous six months.
