Manufacturing activity in the New York State expanded in January with the corresponding index posting its second consecutive positive reading.

The index showing general business conditions in New York State rose to 11.9 points in January, up 2 points from December 2010, the Empire State Manufacturing Survey from the Federal Reserve Bank of New York said on Tuesday.

Markets had expected the NY Empire State Manufacturing Index to rise to 12 points in January.

While the index for new orders increased by 10 points to 12.4 points, the shipments index surged 18 points to 24 points in January.

The inventories index rose 20 points, to 4.2 after slipping into negative in the previous month.

“The details of January's US Empire State manufacturing survey is much stronger than the modest improvement in the headline activity index. Overall, more evidence that the industrial recovery is rapidly gathering momentum again,” said Paul Ashworth, an economist with Capital Economics.

Also, employment index also climbed into positive territory to 8.4 points in January, from -3.4 points last month. More than half of respondents in the survey indicated that they expected their workforce to increase in the year ahead.

Both prices paid and prices received indexes were positive and markedly higher in January. The prices paid index rose 7 points to 35.8, its highest level in several months. The prices received index advanced 12 points to 15.8, its highest level since late 2008.

“The only disappointing note in the survey is the continued upward trend in both the prices paid and received balances,” said Ashworth.

Further, the index showing future general business conditions rose 10 points to 59.0, with 61 percent of respondents expecting conditions to be better in the next six months.

“Future indexes were at relatively high levels, suggesting that manufacturers widely expected conditions to continue improving over the next six months,” the survey said.

The index showing future capital expenditure rose sharply to 34.7 points in January from 22.7 points in December, reaching an 8-month high.

“The future capital expenditures balance rebound suggested that the bigger tax break for business investment introduced at the start of this year, as part of the latest fiscal stimulus package, is already having an impact,” said Ashworth.