A local business confidence index posted a 52.1 reading in May, up 1.6 percent from the previous month’s reading, as Bay State employers got a lift from a strong stock market, the recovery in the housing market, and slightly better news on the employment front.

It was the third consecutive monthly increase and the highest monthly reading since August. Still, May 2013’s reading is down 4.7 points from that of May 2012.

The index, which uses a 100-point scale, is maintained by the Associated Industries of Massachusetts, or AIM, a group made up of employers in the state. A reading above 50 indicates a positive outlook, a reading below 50 a negative one.

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“Not only did the overall index move further above the neutral midpoint, but the indices for current business conditions and for conditions within Massachusetts also rose above neutral, though barely, in May,” Raymond G. Torto, the chair of AIM’s Board of Economic Advisors, said in a statement. “We are seeing signs of strength in the stock market, in real estate markets, in consumer confidence, and to some extent in employment. Here and there, statistics are approaching or surpassing pre-recession levels.”