width=330More U.S. companies plan to increase their work force over the next six months, a survey showed on Monday, which could lead to a stronger recovery.

The National Association for Business Economics said its industry survey found that the outlook for employment was improving, with 37 percent of the 67 members who took part expecting to increase payrolls.

This compared with 29 percent in January. The survey was conducted between March 25 and April 10.

The survey confirms that the recovery continues, with business conditions improving. After more than two years of job losses, job creation increased in the first quarter, said William Strauss, a senior economist at the Federal Reserve Bank of Chicago and economic adviser for the NABE.

With employment lagging the broader economy's recovery from the worst downturn since the 1930s, analysts fear a high jobless rate could hold back growth momentum.

The labor market, however, is now gradually improving and the NABE survey's findings support anecdotal evidence of firms hiring again. The economy in March saw its largest jobs gain in three years, largely driven by private sector hiring.

Only 3 percent of respondents in the NABE survey anticipated significant layoffs, while 46 percent saw no change in head count over the next six months.

A majority of respondents in finance, insurance and real estate planned to increase hiring in the first half of this year. About 40 percent of NABE members in the goods producing sector planned to increase payrolls, while another 40 percent anticipated no change.

The survey also confirmed more businesses were now replenishing inventories after liquidating them to record low levels during the recession to cope with weak demand.

It found that many firms were building stocks in anticipation of stronger sales, with only a few cutting back because they expected weak sales.

The rebuilding of inventories contributed strongly to the resumption of economic growth in the second half of 2009 and is boosting manufacturing activity.

(Reporting by Lucia Mutikani; Editing by Kenneth Barry)