NEW YORK (CNN/Money) - The Chicago PMI report, the latest reading of manufacturing activity, Friday showed far greater strength than expected, and suggested increasing inflationary pressures and hiring in the sector.

The index, based a survey of purchasing managers in the Chicago area that is seen as a bellwether report on overall manufacturing, came in at a seasonally-adjusted 68.0 for May, up from 63.9 reading in April. Economists surveyed by Briefing.com had forecast a slight decline to 62.0, but even that reading would have shown strength since any reading above 50.0 shows growth in the sector.

The survey's hiring index came in at 54.8, up from 50.9 in May, while the price paid index from the survey climbed to 80.0 from 76.1. Those two readings are of particular interest to investors trying to gauge when the Federal Reserve will start to raise interest rates.

Employment and inflation reports the last two months have raised investor anticipation of a Fed rate hike at its June meeting. Bond prices fell and yields, which move in the opposite direction, rose immediately following Friday's Chicago PMI report.