03:18 PM EDT, 10/23/2025 (MT Newswires) -- Manufacturing activity in the US Midwest region unexpectedly increased at a faster sequential pace this month, driven by gains in production and shipments, data from the Federal Reserve Bank of Kansas City showed Thursday.

The composite manufacturing index rose to 6 in October from 4 in September. The consensus was for an index reading of 2 in a survey compiled by Bloomberg.

"Regional factory activity continued to increase modestly in October, and firms expect additional growth in the next six months," Kansas City Fed Assistant Vice President Cortney Cowley said. "Two-thirds of firms surveyed reported that (artificial intelligence) has not affected their business strategy or plans, while another third have used AI or plan to in the future."

The production index jumped to 15 from last month's 4, while shipments rose to 15 from 7. The new orders measure dropped to 1 from 2, while employment fell to 1 from 7. Price growth for both raw materials and finished products picked up pace, the data showed.

The outlook for future activity remained positive, with the composite index jumping to 14 from 7 last month. Firms continued to have positive expectations for production, new orders and employment, according to the report.

Price pressures are expected to intensify in the next six months, the data showed.

US economic activity was little changed since early September as prices increased further, while labor demand was "generally muted," the Fed said in its latest Beige Book released last week.

Two surveys released earlier this month presented mixed trends in the US manufacturing sector for September, with Institute for Supply Management data showing continued contraction and an S&P Global ( SPGI ) report indicating growth losing steam amid tariffs-related concerns.

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