While a report released by the New York Federal Reserve on Wednesday showed that regional manufacturing activity has continued to deteriorate in the month of April, the pace of contraction slowed by much more than expected.

The report showed that the index of activity in the sector rose to a negative 14.7 in April from a negative 38.2 in March, with a negative reading indicating a contraction. Economists had been expecting the index to edge up to a negative 35.0.

A substantial recovery in new orders contributed to the bigger than expected increase by the index, with the new orders index rising to a negative 3.9 in April from a negative 44.8 in March. However, the index continues to indicate a contraction in new orders.

The shipments index also showed a notable increase compared to the previous month, rising to a negative 1.8 from a negative 26.7.

At the same time, the report showed that the inventories index continued to decline, falling to a record low of negative 36.0 in April from a negative 27.0 in March.

The New York Fed also said that the number of employees index rose to a negative 28.1 in April from a negative 38.2 in March, although it continued to indicate weakness in the labor market.

On the inflation front, the prices paid index came in unchanged from the previous month at negative 14.6, while the prices received index rose to a negative 18.0 in April from a negative 23.6 in March.

Looking forward, the New York Fed noted that the future indexes were much improved, with the future general business conditions, new orders, and shipments indexes rising sharply to levels not seen since September of last year.

The future general business conditions index rose to 33.1 in April from 3.1 in March, reflecting expectations that conditions will be better six months from now.

The report also showed that the future new orders index jumped to 33.0 from 4.4, while the future shipments index surged up to 32.1 from 5.3.

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