The Illinois economy remains in a period of contraction, but signs of recovery continue to show, according to the latest University of Illinois Flash Index.

The Flash Index rose in August for the third consecutive month, moving up from 91.6 in July to 92.0 for August. The Flash Index has not been to a level of 92 since July 2009, said economist J. Fred Giertz of the University’s Institute of Government and Public Affairs. Giertz has compiled the Flash Index, which is the first barometer of the Illinois economy each month, since 1995.

“The Flash Index results are consistent with the fact that the Illinois unemployment rate is slowly falling, although the July rate remains at a high 10.3 percent,” Giertz said. “The results confirm the national economic news of a slowing recovery, but likely not a ‘double-dip’ recession.”

The Flash Index has been below 100, indicating a contracting economy, since December 2008. That follows 56 consecutive months in the growth range above 100. The Index has recovered two full points from its recessionary low of 90.0 in September 2009.

The Flash Index is a weighted average of growth rates in Illinois corporate earnings, consumer spending and personal income, as measured by tax receipts. In real terms, corporate tax collections were down slightly in August from the same month last year. Individual income tax receipts were up substantially and sales tax receipts were virtually unchanged.

“It should be noted that the sales tax figure was likely depressed by the back-to-school tax holiday during August,” Giertz said. “An adjustment was made in the Flash Index calculations to address this issue.”

Tax receipts are adjusted for inflation before growth rates are calculated. The growth rate for each component is then calculated for the 12-month period using data through August 31, 2010.