Recession may be easing, index indicates

The economy may recover sooner than previously expected, and possibly as early as later this year, according to the most recent Conference Board Leading Economic Index (LEI).

The June index, released this week, rose for the third consecutive month, with a 0.7 percent increase.

The LEI's six-month change has risen to 2 percent - which represents an annual rate of 4.1 percent - compared to the -3.1 percent change from the previous six months, which had marked an annual rate of -6.2 percent.

After peaking in July 2007, the LEI has steadily declined until six months ago, and now is at its highest level since the first quarter of 2006.

Seven of the ten factors that contribute to the LEI saw gains in June, led by interest rate spread and followed by building permits, stock prices, weekly initial claims and average weekly manufacturing hours.

While recovery is on the horizon, small businesses are likely still having trouble with their working capital, as the Current Economic Index continued its decline in June thanks to constricting employment and industrial production.

However, the increase of the coincident-to-lagging ratio buoyed recovery hopes.

"All in all, the behavior of the composite indexes suggests that the recession will continue to ease and that the economy may begin to recover in the near term," said the Conference Board.