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Manufacturing barometer hits 9-month high

Philadelphia Fed index improves more than expected, with future activity index at 5-1/2-year high.

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By Julianne Pepitone, CNNMoney.com contributing writer

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301 Moved Permanently

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NEW YORK (CNNMoney.com) -- A key survey of manufacturing activity in the Philadelphia area jumped to its highest level since September, and a future indicator hit a 5 1/2-year high, the Federal Reserve Bank of Philadelphia said Thursday.

The Philadelphia Fed index, a reading on manufacturing in the mid-Atlantic region, improved to minus 2.2 in June from minus 22.6 in May.

The report far surpassed estimates. Analysts expected a reading of minus 18, according to a consensus survey from Briefing.com.

The Business Outlook Survey is a barometer of the U.S. manufacturing industry and a precursor to a national report from the Institute for Supply Management due on July 1.

The headline index has been negative for 18 of the past 19 months, as the recession has hammered business and consumer spending power alike.

In June, indexes for new orders and shipments each jumped 21 points. New orders stand at minus 4.8, while shipments turned positive to 2.1. But continued decreases in the indexes for employment and work hours suggested ongoing weakness.

The current employment index improved 5 points from May but remained a relatively weak minus 21.8. A separate government report released Thursday showed initial jobless claims rose last week. The average workweek index improved 3 points, to minus 26.6.

Six-month indicators: Most of the indicators of future activity continued to improve, the report said, "suggesting that the region's manufacturing executives are becoming more optimistic that a recovery in business will occur over the next six months."

The future general activity index remained positive for the 6th straight month, jumping to 60.1 in June from 47.5 in May . That's the highest reading since September 2003. The index has now increased 71 points since December.

The indexes for future new orders and shipments each improved 12 points this month, while the future employment index improved by 3 points and the future workweek index increased 24 points.

For the second straight month, the percentage of companies expecting employment to increase over the next six months, 21%, exceeded the percentage expecting a decrease, 8%.

The percentage of companies expecting more spending, 21%, nearly matched the percentage expecting a decline, 19%.  To top of page

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