Washington  - A key gauge of US economic growth increased slightly in May, the third straight monthly rise and a positive sign as the world's largest economy works to avoid a recession.

The US leading index climbed 0.1 per cent, but only four of the 10 economic indicators that form the index were up on the month, the private New York-based Conference Board said. Consumer confidence and building permits led the declines.

The index also increased 0.1 per cent in April and was unchanged in March - a revised figure - after steadily declining through the previous five months. The measure forecasts the direction of the economy over the next three to six months.

US economic growth was reported at 0.6 per cent in the first quarter of 2008, temporarily easing fears of a recession. A final first-quarter growth estimate will be released next week.

The index increase could encourage the Federal Reserve to raise interest rates for the first time in two years when its board meets on Wednesday. The benchmark federal funds rate has been lowered a total of 3.25 percentage points to 2 per cent since September in an effort to boost growth. (dpa)