The index of U.S. leading economic indicators rose more than forecast in April, a sign the deepest slump in at least half a century is easing. The Conference Board’s gauge increased 1 percent, the biggest gain since November 2005, after a 0.2 percent drop in March, the New York-based group said today. The index points to the direction of the economy over the next three to six months. Rising stock prices and improving consumer confidence are among the components of the leading index that are stoking speculation the economy will begin to grow again in the next six months. Still, with unemployment at a 25-year high and projected to keep climbing into 2010, and lenders restricting credit, the recovery may be muted. “The recession is gradually moderating,” Ryan Sweet, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “Still, the road to recovery will be difficult.” The index was forecast to rise 0.8 percent, according to the median of 57 economists in a Bloomberg News survey, after an originally reported drop of 0.3 percent in March. Estimates ranged from a decline of 0.2 percent to a gain of 1.4 percent. Seven of the 10 indicators in today’s report increased. The biggest boost, of 0.44 percentage point, was provided by the Standard & Poor’s 500 index, which gained 12 percent in April from the prior month’s average. Consumer Sentiment A 0.27 point contribution came from the Reuters/University of Michigan index of consumer expectations, a proxy for future spending, which climbed in April by the most in more than two years. A preliminary report showed the gauge kept rising this month. In a statement following their April meeting, Federal Reserve policy makers cited improved financial conditions, stronger business and household sentiment, and expectations of an increase in industrial production to replace inventories, as reasons why the pace of contraction will probably ease. Still, policy makers projected the economic slump this year would be deeper than they forecast in January and estimated a slower rebound next year, according to meeting minutes issued yesterday. Some officials said the central bank may need to boost asset purchases to further lower borrowing costs and secure a stronger recovery. Seven of the 10 indicators for the leading index are known ahead of time: stock prices, jobless claims, building permits, consumer expectations, the yield curve, factory hours and supplier delivery times. Jobless Claims The Conference Board estimates new orders for consumer goods, bookings for capital goods, and the money supply adjusted for inflation. Jobless claims, which fell to a midpoint of 624,400 in April from 658,000 in March, helped lift the index by 0.16 point. Money supply adjusted for inflation, which has the biggest weighting in the index, took away 0.24 point. It dropped as more stable financial markets prompted Americans to pull funds out of safer savings accounts, certificates of deposit, and money- market mutual funds. New orders for consumer goods added to the index, while bookings for capital equipment subtracted from the index. The Conference Board’s index of coincident indicators, a gauge of current economic activity, fell 0.2 percent, after decreasing 0.6 percent the prior month. The index tracks payrolls, incomes, sales and production. Lagging Indicators The gauge of lagging indicators fell 0.5 percent for the second straight month. The index measures business lending, length of unemployment, service prices and ratios of labor costs, inventories and consumer credit. Building permits, a sign of future construction, took away 0.09 point. Permits fell to a record low last month, reflecting a slump in proposed construction of multi-family units such as apartments and condominiums. The drop overshadowed an increase in permits for single-family houses that added to evidence the worst construction slump since the Great Depression was easing. Some company officials are gaining confidence any further decline in demand will not be as dramatic. LSI Corp. Chief Executive Officer Abhi Talwalkar said calling the bottom now would be “too bold of a statement,” even as sales in the chip industry were improving. Still, “I do believe we won’t experience another freefall like we did in the last quarter and a half,” Talwalkar said in a May 18 interview.

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