01:48 PM EDT, 04/18/2024 (MT Newswires) -- Manufacturing activity in the Mid-Atlantic region unexpectedly improved this month as demand and shipments grew, while firms expressed concern about rising costs, the Federal Reserve Bank of Philadelphia said Thursday.

The Manufacturing Business Outlook Survey's headline gauge for business activity rose to 15.5 in April from 3.2 in March, according to the regional Fed. A survey compiled by Bloomberg indicated a decline to 2. This was the index's third straight positive reading and its highest since April 2022.

The gauge for new orders rallied to 12.2 from 5.4 sequentially while shipments increased to 19.1 from 11.4. Nearly 38% of firms in the April 8-15 survey reported increases in general activity, compared with the 22% that reported decreases. The data show manufacturing activity in the region continued to expand overall, the Fed branch wrote.

"However, the employment index remained negative," the Philadelphia Fed said in the report. "Both price indexes continue to suggest overall price increases."

The index charting number of employees fell to negative 10.7 this month from negative 9.6 in March, suggesting an overall decline in employment. The metric has printed negative in 12 of the past 14 monthly readings.

The prices paid index jumped to 23 in April from 3.7 in March, the highest reading since December 2023. Prices received increased less than a point to 5.5, the survey showed. Roughly 26% of firms reported increases in input prices, compared with 14% in March.

Firms indicated that they expect cost increases across all categories of expenses in 2024, the Philadelphia Fed said. More than 31% of those surveyed noted that wages and compensation costs have increased over the past three months. The responses point to a median expected increase of 3% to 4% for wages and of 4% to 5% for total compensation, both unchanged from last July when the regional Fed last asked the question.

Six months out, expectations for general activity dipped to 34.3 in April from 38.6 in March. The future new orders component eased about seven points to 42.8 and shipments plunged about 14 points to 29.3. Firms indicated that they expect increases in employment and higher raw material costs in the Mid-Atlantic region over the next six months.