WASHINGTON — The gauge of the economy’s prospects rose in September for a third month, signaling the recovery will extend into 2011.

The New York-based Conference Board’s index of leading economic indicators climbed 0.3 percent, matching the median forecast of 57 economists surveyed by Bloomberg News. The number of claims for jobless benefits last week was consistent with little progress in the labor market, another report showed.

Companies from eBay Inc. to Caterpillar Inc. offered improved earnings forecasts. At the same time, persistent unemployment is a reminder that the Federal Reserve may need to do more to spur a pickup in growth.

The data “point toward a sustainable, albeit modest, economic recovery,” said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh. “The job market is showing no real improvement. It’s not good enough for the Fed.”

On Wall Street, the Dow Jones industrial average rose 38.60, or 0.4 percent, to close at 11,146.57. It briefly eclipsed its highest closing level of 2010, which it reached on April 26.

The Standard & Poor’s 500 index rose 2.09, or 0.2 percent, to 1,180.26, while the Nasdaq rose 2.28, or 0.1 percent, to 2,459.67.

Claims for unemployment insurance benefits declined by 23,000 to 452,000 in the week ending Oct. 15, Labor Department figures showed Thursday. The prior week’s figures were revised up by 13,000, to the highest level since late August.

The economy isn’t creating enough jobs to cut unemployment, which is hovering near 10 percent.
A Fed report Wednesday showed the economy is growing at a “modest pace” with companies still hesitant to hire, a reason central bankers may ease monetary policy.

Estimates for the leading index in the Bloomberg survey ranged from gains of 0.1 percent to 0.6 percent. The Conference Board revised the gain in August down to 0.1 percent from its 0.3 percent previous estimate.

Five of the 10 indicators in the leading index contributed to the increase, led by the interest-rate spread between the overnight federal funds rate and the yield on the 10-year Treasury note.

Equity gains also propelled the gauge and continue to signal sustained growth. The S&P has climbed 3.2 percent in the first 20 days of this month on growing speculation the Fed will pump more cash into the economy to spur the recovery, a strategy known as quantitative easing.

“There would appear – all else being equal – to be a case for further action,” Fed Chairman Ben Bernanke said in an Oct. 15 speech. The recovery is likely to be “fairly modest in the near term,” and “the preconditions for a pickup in growth next year remain in place,” he said.

Caterpillar, the world’s largest maker of construction and mining equipment, raised its full-year earnings forecast and posted a third-quarter profit that topped analysts’ estimates amid higher emerging-market demand.

EBay, owner of the second-most visited e-commerce site, forecast fourth-quarter sales and earnings that exceeded analysts’ estimates. The San Jose, Calif.-based company has cut listing fees to lure sellers and has made its site easier to use. The company is also benefitting from a rise in the number of consumers making purchases online.