By Xavier Fontdegloria

An economic index that measures U.S. business cycles increased in March at a robust pace following a slight drop the previous month, signaling that the economic recovery is gaining steam, data from The Conference Board showed Thursday.

The Leading Economic index was 111.6 in March, up 1.3% compared with February. The rise beats expectations from economists polled by The Wall Street Journal, who forecast the indicator to increase by 1%. In February, the index decreased by a marginal 0.1% compared with January.

March's rise marks a significant bounce back from February's fall, which came after nine consecutive months of gains. The reading for March is the highest since August 2020, when the economy experienced an initial rebound amid its first reopening.

"The U.S. LEI rose sharply in March, which more than offset February's slightly negative revised figure," Conference Board Senior Director of Economic Research Ataman Ozyildirim said.

The improvement in the index suggests economic momentum is increasing in the near term and it is consistent with the economy picking up in the coming months, he said.

The Conference Board Leading Economic Index is based on 10 components, among them initial claims for unemployment insurance, manufacturers' new orders, building permits of new private housing units, stock prices and consumers expectations. It is intended to signal swings in the business cycle and to smooth out some of the volatility of individual indicators. All 10 components contributed positively to the index in March.

The widespread gains among the leading indicators are supported by an accelerating vaccination campaign, gradual lifting of mobility restrictions, as well as current and expected fiscal stimulus, Mr. Ozyildirim said. The Conference Board projects that year-over-year growth could reach 6% this year, he said.

The Coincident Economic Index rose 0.6% in March to 104.0, while the Lagging Economic Index declined 0.5% to 105.1, the data from The Conference Board showed.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

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April 22, 2021 10:36 ET (14:36 GMT)