NEW YORK (Reuters) - The New York Federal Reserve said on Monday its gauge of manufacturing growth in New York state recorded its biggest increase in more than two years in July, returning to positive territory to suggest regional activity was expanding again.
The index's increase reversed the prior month's record 26 point drop that had stoked concerns about a sudden contraction in business activity across New York state.
"Manufacturing firms in New York State reported that business activity grew modestly in July," the New York Fed said of the latest figures.
U.S. business sentiment has been bogged down by trade tensions between the United States and its major trading partners. Some of those concerns have been offset by hopes the Federal Reserve would lower short-term interest costs to boost borrowing and demand.
The regional Fed's "Empire State" index on current business conditions jumped to 4.3 points this month from -8.6 in June, which had been the first negative reading since October 2016.
For July, analysts polled by Reuters had forecast a reading of 2.0.
A reading above zero suggests an expansion in regional business activity.
Details in the latest "Empire" report were mixed.
The new orders index rose to -1.5 from -12.0, which had been a three-year low.
The six-month outlook measure climbed to 30.8 from 25.7 the month before.
On the other hand, the employment gauge fell deeper into negative territory to -9.6 in July, which was the lowest since January 2016.
The index on prices paid slipped to 25.5 from 27.8, while the gauge on prices received ticked down to 5.8 from 6.8.
"On net, a decent but somewhat mixed report that confirms economic activity is not collapsing," Jon Hill, U.S. rates strategist at BMO Capital Markets, wrote in a research note.