Investing.com - The Philadelphia Fed's manufacturing index rose higher than expected in May, to a reading of 34.4 from 23.2 in April, the Philly Fed reported on Thursday.
The consensus forecast had been for a reading of 21.0.
Any reading above zero indicates improving conditions, below indicates worsening conditions.
With regard to future activity in the sector, new orders surged to 40.6 in May, compared to last month's reading of 18.4.
The employment index advanced to 30.2 in May, compared to a prior reading of 27.1, indicating a faster pace of hiring.
The prices paid index fell to 52.60 this month, from 56.40.
Firms are optimistic about the future, the Philadelphia Fed noted in its releasd, citing the continued expansion of general activity, new orders, shipments and employment readings.
"Nearly 64 percent of the firms expect price increases for purchased inputs over the next six months, and 36 percent expect higher prices for their own manufactured goods," the report said.
"The indexes for prices paid and received continued to suggest price pressures. Looking ahead six months, the firms continued to be optimistic about the outlook for manufacturing activity," the survey added.