Forward-looking economic indicators took an unexpected drop in February due to manufacturing sector weakness, Statistics Canada said today.

StatsCan said its smoothed composite index of leading indicators dipped 0.3% in February after a 0.1% gain in January.

Economists had an average forecast of a gain of 0.1% for February.

A sharp contraction in manufacturing, concentrated in the auto sector, at the end of the year was the main source for the drop, Statistics Canada said.

Of the 10 components that go into the index, six decreased while four were higher.

Falling components included stock market, which continued to trend down last month.

The housing index also dropped as lower existing home sales offset higher housing starts in both January and February.

Te leading indicator for the United States fell 0.2%, after revisions aggravated its declines late in 2007. Continued weakness in housing and consumer confidence also helped lower the stock market in the U.S.