By Adam Geller
The Associated Press

NEW YORK - The nation's long-stagnant economy again showed signs of recovery in August, although the job market continued to be a damper, according to a closely watched gauge of future business activity.

The Conference Board reported Thursday that its Index of Leading Economic Indicators rose 0.4 percent in August to 113.3, in line with analysts' expectations.

But the improvement in the economic outlook was tempered by stagnation in the board's reading of the current business climate, weighed down by continued weakness in the job market.

Analysts said the report points to an economic recovery that continues to strengthen, albeit one where the lack of job creation is a problem.

"Everything is showing us growth except for employment, and it's the one area where we're having a little trouble seeing recovery," said Gina Martin, an economist with Wachovia Corp. in Charlotte, N.C.

Even with that drag, the Conference Board's reading is a sign of a business environment that should improve in coming months, economists said.

The leading index measures where the U.S. economy is headed in the next three to six months. It stood at 100 in 1996, its base year.

Four of the 10 components of the leading index rose in August, including improvements in the interest rate spread, vendor performance, real money supply and building permits.

Meanwhile, the latest snapshot of the labor markets was slightly better than economists were expecting. The Labor Department report Thursday that the number of Americans filing new claims for unemployment benefits declined last week after rising in the three previous weeks.