An index measuring the U.S. economy's prospects rose for a fifth straight month in August to a 1-1/2 year high as stock market prices surged on views a recovery had started.

The Conference Board said on Monday its index of leading economic indicators, which is supposed to forecast economic trends six to nine months ahead, rose 0.6 percent to 102.5, the highest level since January 2008, after a revised 0.9 percent gain in July.

Wall Street economists had forecast a rise of 0.7 percent after an initially reported 0.6 percent increase in July.

U.S. financial markets were little moved on the data.

This suggests that the recession is bottoming out. These numbers are consistent with the view that after a severe downturn, a recovery is very near. But the intensity and pattern of that recovery is more uncertain, said Conference Board economist Ken Goldstein.

Supplier deliveries, the interest rate spread, stock market prices, building permits and consumer expectations contributed positively to the leading indicator in August, the board said.

Real money supply, average weekly initial claims for unemployment insurance and manufacturers' new orders for nondefense capital goods were a drag on the index. Average weekly manufacturing hours and manufacturers' new orders for consumer goods and materials were steady in August.

The money supply declined again, which is not good. But the other indicators are showing a pickup in the economy in the third quarter, which is not a big surprise, said Brian Bethune, U.S. economist, IHS Global Insight in Waltham, Massachusetts.

Our view is that it's not a sustainable (recovery) because that's a lot of special factors like 'cash for clunkers'. By and large, this indicator is reflecting for the most part current conditions in the quarter. By the end of the year we should see slower momentum.

The coincident economic index was unchanged at 99.8 in August, while the lagging index slipped 0.1 percent to 110.2.

(Reporting by Lucia Mutikani, Editing by Chizu Nomiyama)