Nov. 21 (Bloomberg) -- The index of leading U.S. economic indicators fell in October as building permits plunged, companies fired more workers and consumer sentiment dimmed, economists said before a private report today.

The Conference Board's gauge decreased 0.3 percent after rising 0.3 percent in September, according to the median estimate of 60 economists surveyed by Bloomberg News. The New York-based group's measure points to the direction of the economy over the next three to six months.

The biggest housing slump in 16 years may be starting to ripple through the economy as it undermines confidence. A separate report today is expected to show consumer sentiment continued to flag this month, which may put a damper on spending during the holiday season.

``Through one way or another, the housing headwind and credit turmoil are bleeding through into some of the other indicators,'' said Michael Gregory, a senior economist at BMO Capital Markets in Toronto. ``Momentum definitely is ebbing in the economy.''

The Conference Board is scheduled to issue the report at 10 a.m. in New York. Forecasts in the Bloomberg News survey ranged from no change to a 1 percent drop.

Treasury securities rallied today, sending 10-year note yields below 4 percent for the first time since 2005, on concern mounting losses on subprime securities will hurt access to credit and slow economic growth.

Consumer Sentiment

Separately, the Reuters/University of Michigan November index of consumer sentiment probably fell to 75, the lowest in two years, according to the survey median. Estimates ranged from 72 to 81. The report also will be released at 10 a.m.

The university's consumer expectations index, which is a component of the leading index, fell to 70 in October. The gauge, which some economists consider a harbinger of future spending, dropped again this month, according to a preliminary report issued earlier this month.

Rising energy prices, increasing unemployment and continued weakness in housing concern Americans and may lead to the weakest holiday sales season in five years, according a forecast by the National Retail Federation, a Washington-based trade group.

J.C. Penney Co., Starbucks Inc. and FedEx Corp. are among companies that have recently lowered profit forecasts.

Index Components

Seven of the 10 components of the leading economic indicators index are known before the report: initial jobless claims, consumer expectations, building permits, supplier deliveries, the yield curve, stock prices and factory hours.

The Conference Board estimates money supply adjusted for inflation, new orders for consumer goods and orders for non- defense capital goods.

The number of building permits issued last month fell 6.6 percent to the lowest levels since 1993, the Commerce Department reported yesterday.

Initial jobless claims averaged 327,500 in October, up from 313,300 in September. The Labor Department will report last week's claims figure at 8:30 a.m. today in Washington. Economists estimate the measure fell to 330,000, from a one-month high of 339,000 the prior week.

The economy is projected to grow at a 1.5 percent annual rate this quarter after expanding at a 3.9 percent pace in the previous three months, according to a Bloomberg News survey taken earlier this month.

Fed Forecasts

Federal Reserve policy makers lowered their growth forecasts in October and worried about credit-market losses, according to the minutes of their Oct. 31 meeting issued yesterday. Their decision to reduce the benchmark interest rate target by a quarter percentage-point was described as a ``close call.''

The records of the gathering were accompanied by estimates and language that highlighted risks to growth. Traders anticipate the central bank will be forced to trim borrowing costs again next month.

Cisco Systems Inc., the world's largest maker of networking equipment, said earlier this month that declining orders from automobile and financial companies are curbing growth.

``The U.S. economy, to most of my customers, felt like we were coming in a soft landing,'' John Chambers, chief executive officer of Cisco, said on a conference call Nov. 7. An ``air of conservatism'' is ``affecting their purchasing.''

                        Bloomberg Survey

FIRM                     Jobless   U of M    LEI
                             Claims   Conf.
   --------------------------------------------------
   Number of replies           40       58       60
   MEDIAN                     330      75.0    -0.3%
   AVERAGE                    330      74.9    -0.3%
   High Forecast              340      81.0     0.0%
   Low Forecast               320      72.0    -1.0%
   Previous                   339      75.0     0.3%
   --------------------------------------------------
   4CAST Ltd.                 330      79.0    -0.5%
   Action Economics           328      75.0    -0.2%
   Alleti Gestielle SGR       n/a      73.8     n/a
   Argus Research             n/a      79.0    -0.1%
   BBVA                       n/a      81.0    -0.2%
   BMO Capital Markets        329      75.0    -0.3%
   BNP Paribas                340      74.0    -0.3%
   B of A Securities          n/a      n/a     -0.4%
   Bantleon Bank AG           n/a      75.5    -0.3%
   Barclays Capital           330      73.0     n/a
   Bear Stearns               330      75.0     n/a
   BOT- Mitsubishi            332      75.1    -0.3%
   Briefing.com               330      75.0    -0.3%
   Calyon                     n/a      75.0     n/a
   CEMEX                      n/a      75.0    -0.1%
   CFC Group                  327      74.0    -1.0%
   Citigroup                  335      74.0    -0.3%
   Commerzbank                330      n/a     -0.3%
   Credit Suisse              330      75.0    -0.4%
   Daiwa Securities           n/a      n/a     -0.3%
   DekaBank                   n/a      75.0    -0.4%
   Desjardins Group           330      74.0    -0.4%
   Deutsche Bank              330      74.0    -0.3%
   Deutsche PostBank          n/a      75.0    -0.3%
   Dresdner Kleinwort         n/a      75.0    -0.3%
   DZ Bank                    n/a      75.0    -0.3%
   FTN Financial              n/a      74.5     n/a
   First Trust Advisors       330      75.0    -0.3%
   Fortis                     n/a      75.0     n/a
   Global Insight             n/a      75.0     n/a
   Goldman Sachs              n/a      n/a     -0.3%
   H&R Block Financial        325      74.0     n/a
   High Frequency             n/a      75.0     0.0%
   HBOS Treasury              330      75.0    -0.3%
   HSH Nordbank AG            335      75.0    -0.3%
   Horizon Investments        n/a      75.0    -0.4%
   IDEAglobal                 320      75.0    -0.3%
   ING Barings                n/a      73.5    -0.3%
   Informa Global             335      74.0    -0.3%
   Insight Economics          325      76.0    -0.3%
   J.P. Morgan Chase          325      74.0    -0.3%
   JPMorgan Private           340      74.5    -0.2%
   Janney Montgomery          n/a      n/a     -0.2%
   Landesbank BW              n/a      73.5    -0.2%
   Landesbank Berlin          340      72.7    -0.3%
   Lehman                     n/a      75.0    -0.3%
   Maria Fiorini              330      n/a     -0.4%
   Merrill Lynch              330      72.0    -0.5%
   Mizuho Securities          n/a      n/a     -0.5%
   Moody's Economy.com        335      75.0    -0.2%
   Morgan Keegan              n/a      n/a     -0.1%
   Morgan Stanley             n/a      n/a     -0.3%
   National Bank Fin.         n/a      75.0    -0.2%
   National City Bank         n/a      75.5    -0.4%
   Nomura                     n/a      n/a     -0.4%
   Nord/LB                    333      75.0     n/a
   PNC Bank                   n/a      n/a     -0.3%
   RBS Greenwich Cap.         320      75.0    -0.3%
   Ried, Thunberg             330      75.0    -0.5%
   Scotia Capital             340      75.0    -0.3%
   Societe Generale           325      n/a      n/a
   Stone & McCarthy           330      75.0    -0.6%
   Thomson/IFR                330      75.0    -0.3%
   UBS Securities LLC         330      74.0    -0.4%
   Unicredit- UBM             325      n/a     -0.2%
   Univ. of MD                322      76.0    -0.3%
   Wachovia                   n/a      75.0    -0.3%
   Wells Fargo                322      76.0    -0.2%
   WestLB AG                  n/a      74.8    -0.5%
   Westpac Banking            330      74.0    -0.4%
   Wrightson                  325      75.0     n/a

To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net

Last Updated: November 21, 2007 08:16 EST