"Consumption has consistently fueled the recovery through the first half of the year," said Conference Board Economist Ken Goldstein. "The increase in the leading indicators now offers hope that economic performance may improve in the second half of the year.

"For this to happen, consumption must remain reasonably strong and has to be joined by a rise in investment.

"This recovery contrasts significantly with past upswings because of a lack of the usual post-recession pent-up demand. The recession was too short and shallow, and more concentrated in the industrial core of the economy, to trigger much pent-up demand."

The Conference Board also reports that the Coincident Index posted its third increase in the last five months, rising by 0.1 percent in May after no change in April. Gains in income and industrial production have been fairly steady contributors to this new rising trend. The lagging index fell 0.2 percent in May, after a 0.5 percent decline in April and a 0.6 percent fall in March.

Commercial and industrial loan activity remains a weak segment of the lagging index.

All four indicators that make up the coincident index increased in May. The largest contributor to the index was personal income less transfer payments. Industrial production, manufacturing and trade sales, and employees on nonagricultural payrolls had equivalent contributions. With the increase in May, the coincident index now stands at 115.8 (1996=100). Based on revised data, this index held steady in April and increased 0.1 percent in March.

During the six-month period through May, the coincident index increased 0.4 percent.