Manufacturing index jumps in April

NEW YORK (CNNMoney.com) -- Manufacturing activity jumped in April, coming in well above Wall Street forecasts, according to a closely watched survey of industry executives released Tuesday.

The Institute for Supply Management said its index of national manufacturing activity jumped to 54.7 from 50.9 in March. Economists surveyed by Briefing.com had forecast a rise to 51.0. A reading over 50 indicates growth in the sector, while a reading below 50 points to contraction.

The group said that its new orders index climbed to 58.5 from 51.6 in March while its prices paid index jumped to 73.0 in April from 65.5 - showing that pricing pressures were picking up.

On Wall Street, stocks traded mixed after the report but Treasury bond prices fell as investors worried about the inflation signals in the report. Bond investors hate inflation since it erodes the value of their long-term investments.

The ISM gauge is watched closely by the Federal Reserve, the nation's central bank, which has held interest rates steady in recent months. The Fed raises rates to slow growth and ward off inflation, and cuts them to spur the economy.