Six of the 10 indicators that make up the index's composite were positive in February, according to figures released today by the state.

"This is certainly encouraging news," said Seiji Naya, director of the state Department of Business, Economic Development and Tourism. "However, we should be cautious as one month does not make a trend. We need to have a few additional months of improvement in the index before we can anticipate an upturn in our local economy with any confidence."

Of the six positive indicators, three were based on national economic activity. The U.S. economy was growing at a fast pace in February, but has slowed in recent months.

U.S. gross domestic product grew during the first quarter at a 5.6 percent annual rate, the fastest in almost two years. Growth will probably slow to a 3.1 percent pace this quarter, according to the latest Blue Chip Economic Indicators survey.

Low interest rates in Hawai'i were also a key to the improving picture. O'ahu real estate prices and the number of real estate transactions were the only two positive numbers out of five statewide indicators included in the leading indicators.

The three negative indicators were unemployment claims, average work hours and the value of new construction permits.

"Hawai'i's economy has been recovering from the effects of the Sept. 11 tragedy since December of last year," Naya said. "A sustained turn around in the leading economic index would be a good indication that we are moving out of the economic slowdown. A stronger local economy would certainly be consistent with a number of positive signs we are seeing locally, nationally and internationally."