A key measure of economic activity in the US has fallen in July, signalling that the downturn is still far from over.

The Conference Board index of leading indicators fell by 0.4% in July - its largest decline since September 2001.

The combination of weak stock markets, shaky consumer confidence and corporate scandals were blamed for the decline.

Fears over the US economic recovery have been growing since the latest data revealed a sharp slowdown in economic growth, raising the possibility of a double-dip recession.

'Trouble Spots'

"The second consecutive decline in the leading indicators index raises fears about the current recovery," Ken Goldstein, the board's chief economist said in a statement.

"Volatile financial markets, corporate scandals and sagging consumer expectations are trouble spots," he said.

On a more positive note, the latest evidence did not reveal any significant weakening in consumer markets, with home and car buying continuing to be strong.

The uncertainties abut the US economy prompted the Federal Reserve to leave interest rates unchanged at 40-years low earlier this month.

But chairman Alan Greenspan has already hinted that more cuts could be forthcoming if the economy deteriorates further.