(Bloomberg News) The index of U.S. leading indicators rose in February by the most in 11 months, signaling the world's largest economy will strengthen.

The Conference Board's gauge of the outlook for the next three to six months increased 0.7 percent after a revised 0.2 percent gain in January that was less than initially reported, the New York-based group said today. The median forecast of economists surveyed by Bloomberg News called for a 0.6 percent rise.

More hiring and a jobless rate that held at a three-year low last month may encourage Americans to boost their spending, which accounts for about 70 percent of the economy. Strengthening demand may also drive production gains at factories, helping to sustain the expansion and allowing the U.S. to withstand higher oil costs.

"The general picture will be gradually improving," Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, said before the report. "We're clearly getting good signals from the labor market."

Estimates of 49 economists in the Bloomberg survey ranged from gains of 0.3 percent to 0.8 percent.

Eight of the 10 indicators in the leading index contributed to the increase, led by fewer Americans filing first-time claims for unemployment benefits and by a surge in stock prices.

Claims for jobless benefits dropped last week to the lowest level in four years, a Labor Department report showed today. Applications for unemployment insurance fell by 5,000 to 348,000.

Coincident Indicators

The Conference Board's index of coincident indicators, a gauge of current economic activity, rose 0.2 percent for a second month.

The coincident index tracks payrolls, incomes, sales and production -- the measures used by the National Bureau of Economic Research to determine the beginning and end of U.S. recessions.

The gauge of lagging indicators also increased 0.2 percent.

Consumers' moods also are lifting. More Americans this month said the economy was improving than at any time in eight years, according to a Bloomberg measure of consumer sentiment. The share of households viewing the economy as heading in the right direction rose to 34 percent in March, the most since January 2004, pushing the Bloomberg monthly expectations gauge to a one-year high of 1.

The weekly Bloomberg Comfort Index was minus 34.9 in the period ended March 18 after reaching a four-year high of minus 33.7 over the previous seven days.

Companies seeing signs of demand include Columbus, Ohio- based Limited Brands Inc., which owns the Victoria's Secret lingerie chain and Bath & Body Works stores.

'Some Improvement'

"We're seeing some improvement in the environment" for the American consumer, Stuart Burgdoerfer, chief financial officer at Limited Brands, said March 15 at a consumer conference. "We're all looking at various indicators of performance. There are certainly some signs of improvement."

Central bank officials, while noting the pickup in the labor market and economic conditions at their meeting last week, said they plan to keep the benchmark interest rate near zero through the next two years.

The Conference Board in January announced changes in the components of the leading index, the first such move since 1996. The group now has its own Leading Credit Index, which aggregates measures of the yield curve, interest-rate swaps and the Fed's senior loan officer survey. Other changes include revamped measures of new orders and consumer expectations.