NEW YORK (CNN/Money) - A closely watched measure of manufacturing activity in the Chicago area rose in October, the region's purchasing managers said Friday, in a report that slightly missed Wall Street forecasts.

The National Association of Purchasing Management-Chicago said its index of regional manufacturing rose to 55 from 51.2 in September. The index has been above 50, signaling expansion in the sector, for six straight months.

Economists, on average, expected the Chicago PMI index to rise to 55.4, according to Briefing.com.

U.S. stock market prices were mixed after the report. Treasury bond prices rose.

Perhaps the most encouraging aspect of the report was the fact that its "employment" index jumped to 53.1 from 45.3, marking the second time in the past three months that the index has been above 50, indicating manufacturers are hiring workers.

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"This report is stronger than it looks and is consistent with the industrial recovery gathering pace," said Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd.

Despite robust overall economic growth in the third quarter, many economists are anxious to see significant hiring begin. Consumer spending drove the third-quarter burst of activity, and many economists worry spending will slack off if the labor market, mired in its longest slump since World War II, doesn't noticeably improve soon.

More worrisome was the Chicago group's "prices paid" index, which jumped to 61.5 from 51.8 in September. Many goods manufacturers are having a hard time raising prices on their output, so a jump in commodity prices could crimp their profitability.

The group's "new orders" index posted a healthy gain, to 59.2 from 53.2 in September, though the "order backlog" dropped to 47.3 from 50.7.

The "inventories" index fell to 38.1 from 52.8 in September. Business inventories in the total economy fell in the third quarter, and many economists hope inventory rebuilding will push fourth-quarter economic growth higher. The Chicago PMI number could indicate that process has not yet begun.

The report comes in advance of Monday's closely watched survey of national manufacturing activity from the Institute for Supply Management (which some people still call by its old name, NAPM). Economists, on average, expect that index to rise to 55.8 from September's reading of 53.7.