WASHINGTON (MarketWatch) -- The recession is "losing steam" and a slow U.S. recovery should begin by the end of the year, the Conference Board said Thursday as it announced that the index of leading economic indicators rose 1.2% in May, the second straight increase.
The increase was in line with the MarketWatch consensus forecast of 1.1% increase. April's index was revised up to 1.1% from 1.0%. See Economic Calendar.
Seven of the 10 indicators improved in May, the private research organization said. Read more.
The leading index is up 1.2% in the past six months, the first increase since April 2007.
The coincident index fell 0.2% in May, "but the declines are less intense," said Ken Goldstein, an economist for the organization.
"The recession is losing steam," Goldstein said. "Confidence is building and financial market volatility is abating. Even the housing market appears to be stabilizing."
"If these trends continue, expect a slow recovery beginning before the end of the year," Goldstein continued. "However, employment will take longer to turn around."
The leading index is designed to forecast turning points in the economy six to nine months away. The index peaked in July 2007, six months before the recession began.
In May, seven of the 10 indicators improved: delivery times, the interest-rate spread, stock prices, money supply, consumer expectations, building permits and capital-goods orders. Three fell: Factory work hours, initial jobless claims, and consumer-goods orders.
The coincident index tracks the same four indicators used by the National Bureau of Economic Research to judge the beginning and ends of recessions: employment, income, industrial output and business sales. The coincident index fell 0.2% in May and is down 3.3% in the past six months.
In a separate report Thursday, the Philly Fed index rose to negative 2.2 in June from negative 22.6 in May, indicating the best business conditions in the Philadelphia region since September. New orders and shipments improved, while employment remained very weak.
Rex Nutting is Washington bureau chief of MarketWatch.
The Conference Board, a non-profit global business organization, said on Thursday that its index of leading economic indicators in the United States rose by 1.2% last month, the second consecutive increase. The rise is the largest back-to-back increase since the last two months of 2001, the group said.

Seven of the ten indicators had seen an improvement: stock prices, money supply, building permits, capital-goods orders, consumer expectation and interest-rate spread. The three indicators that had contracted were initial jobless claims, consumer-goods orders, and work hours at factories.

"The recession is losing steam," said an economist for the Board, Ken Goldstein. "Confidence is building and financial market volatility is abating. Even the housing market appears to be stabilizing."

"If these trends continue, expect a slow recovery beginning before the end of the year. However, employment will take longer to turn around," he added.