A trio of widely watched economic reports out today (Feb. 20) indicate that the economy is on shaky footing, with two of the three showing outright contraction and a third providing an inconclusive outlook.

The reports, from the Conference Board, the Philadelphia Federal Reserve and the U.S. Labor Department combined to halt an early rally in the stock markets that included the big public builders, half of which turned down by midday. The S&P home builder exhange-traded fund (AMEX:XHB), which includes more than a dozen public builder stocks, was trading down four cents at $20.56 at 1:30 p.m.

The Conference Board's Leading Economic Indicator Index fell 0.1% in January, the fourth straight month it has declined. Since July, it has fallen 2%, its largest six-month drop since 2001. "Taken together, the current behavior of the composite indexes suggests increasing risks for further economic weakness, and that sluggish economic growth will likely continue in the near term," said the Conference Board in a statement.

The Philadelphia Fed survey of manufacturing activity in the mid-Atlantic states, considered a reliable barometer for the economic health of the region, reported that "manufacturers¹ outlook for the next six months turned noticeably more pessimistic this month." The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, fell from-20.9 in January to -24.0 in February. Though 40% of surveyed firms reported no change in activity from January, but the percentage reporting decreases(42%) was substantially greater than the percentage reporting increases (18%).

Earlier on Thursday, the U.S. Labor Department reported a decrease of 9,000 in its weekly survey of initial jobless claims, which, at first blush, looked like good news since it beat Wall Street estimates of a drop of 1,000. However, the Labor Department also revised the previous week upward by 10,000, which meant a net loss of 1,000 jobs on a week-to-week, seasonally adjusted basis.

Separately, the Conference Board's president on Wednesday (Feb. 19) said that a recession "is not imminent" and that the housing correction was near its bottom. "While the correction in the financial sector is just beginning, the correction in the housing sector is nearly over," wrote Gail D. Fosler, president and chief economist, in the Conference Board's newsletter to members. "Exports are booming and imports and import penetration are down,"she continued. "While there is continuing uncertainty about the economic outlook, economic shocks from the contracting financial sector are not enough to tip the U.S. economy into recession."

On housing, Fosler wrote, "The housing market correction is about over...Housing affordability is beginning to improve, and with the recent interest rate cuts and home price declines, it should improve further and limit the downside risk. January and February are not big months for housing, but rising affordability bodes well for the spring selling season."