A gauge of manufacturing in New York state rose in February as inventories jumped, the New York Federal Reserve said in a report on Tuesday.
The New York Fed's Empire State general business conditions index rose to 24.91 in February, the highest level since October and up from 15.92 in January.
Economists polled by Reuters had expected a February figure of 18.
Despite a stronger-than-expected headline reading, some analysts said the details of the report are somewhat more bearish.
A lot of the improvement was driven by a correction of inventories, said Anna Piretti, senior U.S. economist at BNP Paribas in New York. It's a temporary factor. What worried me more was a sharp decline in new orders.
The inventories index rose sharply, to 0.0, its highest reading in more than a year.
But the new orders index tumbled to 8.78 in February from 20.48 in the previous month.
This clearly indicates that some of the demand that we hoped would sustain the recovery in manufacturing is not there, Piretti said.
Employment indexes were positive for a second consecutive month, although at relatively low levels, the Fed said.
The expectations index for six months ahead slipped to 52.78 in February from 56.
(Additional reporting by Emily Flitter)
(Reporting by John Parry and Wanfeng Zhou; Editing by Theodore d'Afflisio)