In spite of the decline in LEI, the economy is still on pace for moderate expansion, Ozyildirim said. The S&P 500 is down 5.87 percent so far this year, while the initial claims for state unemployment benefits decreased 7,000 to a seasonally adjusted 262,000 for the week ended Feb. 13, the lowest reading since November, the Labor Department said in a separate report.
"Despite back-to-back monthly declines, the index doesn't signal a significant increase in the risk of recession, and its six-month growth rate remains consistent with a modest economic expansion through early 2016," Ozyildirim said in a statement.
Analysts from Thomson Reuters expected a decline of 0.2 percent in January, after a 0.2 percent decline in December 2015. The LEI, a closely followed barometer of economic health, has 10 components including manufacturers' new orders, stock prices, and average weekly initial claims for unemployment insurance.