Jul. 6--AFTER FREE-FALLING FOR MONTHS, consumer confidence rebounded slightly in May, bolstering the region somewhat and suggesting some economic indicators may be hitting or nearing a bottom, according to the Register's monthly economic scorecard. "We have some signs that consumer confidence is bottoming," said Donald Klepper-Smith, chief economist at DataCore Partners in New Haven, who compiles the scorecard. Consumer confidence is an important indicator to watch, he said, since consumer sentiment and spending drives the bulk of the economy. New England's consumer confidence grew 2.8 percent in May compared with a year ago, reversing a recent trend of steep year-over-year declines. It was one of three indicators -- along with a growing labor force and easing consumer prices -- that garnered "thumbs up" in the scorecard, meaning they showed growth or improvement. The remaining five indicators, however, still drew "thumbs down," signifying deterioration.

While signs of economic recovery are emerging, it has become clear that progress will take time, said Anthony Rescigno, president of the Greater New Haven Chamber of Commerce.

"We're heading in the right direction," he said. "We're headed up, but it's a slow go."

Business owners are anticipating a long, drawn-out recovery, he said. Some industries like health care, education and certain technology fields are doing well despite the economy, while others such as real estate, retail and the auto industry are hurt by the recession.

An encouraging sign, Rescigno said, is that business owners feel their companies and workers have become more efficient and productive in tough times which should help improve their bottom lines.

"If businesses can make money, then they're going to hire people and things will start to improve," he said.

Many hurdles persist on the road to an economic recovery in the region, though, the scorecard shows.

Another key indicator, along with consumer confidence, is the employment market and the region continues to lose jobs. Total employment in the New Haven labor market fell 1.5 percent in May compared with a year ago.

"The job market just continues to be sluggish," Klepper-Smith said. "There's some evidence that losses are becoming smaller," but the unemployment rate likely will keep rising before topping out between 8 and 9 percent, he said.

In May, the region's unemployment rate was 7.8 percent.

But the region's labor force, which includes those working and those looking for work, continued to grow in May, compared with a year ago, once again providing one of the region's few bright spots.

One area of the economy that continues to struggle is the housing market, with home prices and housing starts continuing to lag last year's levels significantly.

Only 16 housing permits were issued in 14 New Haven area towns in May, a 79 percent plunge from the 76 issued a year ago in those towns.

Homes that manage to sell continue to fetch smaller price tags than they previously may have. In April, the most recent month for which data was available when the scorecard was compiled, the median sale price for a single-family house in the region was $200,000, down 15 percent from $235,6000 a year ago.

For the most part, consumers will not feel confident enough to re-enter the housing market until they feel more secure about their employment situation and finances, Klepper-Smith said.

They can take some comfort, however, in easing consumer prices. The national Consumer Price Index fell 1.3 percent in May from a year ago.

Yet, real disposable income in Connecticut continued to slide, falling 0.9 percent in the second quarter compared with a year ago.

The economy is on track to start improving relatively soon, thanks to federal stimulus efforts, he said. The question remains, though, whether that improvement will be sustainable, he said.

"There's evidence that we're in the midst of a bottoming process," Klepper-Smith said. "I expect these numbers to improve as we move into the second half of the year."

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