Separately, the number of newly laid-off workers filing for unemployment benefits remained at worrisomely high levels, even as it dropped slightly last week.

The New York-based Conference Board said Thursday its economic indicators rose 0.1 percent in May, matching expectations of economists surveyed by Thomson/IFR. The increase in the indicators, a measure of future economic activity, equaled April's 0.1 percent advance. The Conference Board revised March's number down from 0.1 to zero.

The index is designed to forecast economic activity in the next three to six months based on 10 components, including stock prices, building permits and initial claims for unemployment benefits.

"The economy is very weak heading into the summer, with gas and utility bills possibly heading even higher," said Ken Goldstein, Conference Board economist. "But latest data suggest the economy has not fallen into a contraction and may not undergo one in the second half of the year."

Beth N. Carvin, CEO of Honolulu-based Nobscot Corp., a human resources software maker, said the company's business remains steady, but its customers are worried about their employees.

"Employees are stopping contributions to their 401(k) plans out of pure desperation," she said. "Normally, a human resources person would encourage them to save, remind them of the company match. Now, with everything so expensive, what can they say?"

Nobscot introduced a product this month to help personnel departments manage large-scale layoffs. "It's a hedge on the economy," she said.

The Philadelphia Federal Reserve's June survey of manufacturing in Philadelphia, southern New Jersey and Delaware also fell, with measures of new orders, current shipments and employment all declining. A larger number of companies reported higher prices in June than in May; 65 percent said they expected to raise their prices in the next three months.

The survey's broad reading of manufacturing activity turned negative in December 2007 and "has been basically at recession levels all this year," said Joel Naroff, of Naroff Economic Advisors. The length of the decline matches recessions in the early 1980s and 1990, he said.

Concerns remain that the country could slip into a recession, but many analysts now believe the 130 million households who received economic stimulus payments from the Federal government will help the nation avoid a severe downturn.

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