Philly Fed factory activity highest since April

NEW YORK (Reuters) - Factory activity in the U.S. mid-Atlantic region unexpectedly expanded in October to its highest level in six months, rebounding from recent weakness, a Federal Reserve survey showed on Thursday.

The Philadelphia Federal Reserve Bank said its business activity index jumped to 8.7 from minus 17.5 the month before.

That far exceeded economists' expectations for minus 9.0, according to a Reuters poll, and was the highest since April 2011.

Any reading above zero indicates expansion in the region's manufacturing. The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware.

It is seen as one of the first monthly indicators of the health of U.S. manufacturing leading up to the national report by the Institute for Supply Management. Analysts said the report boded well for the ISM data due at the beginning of next month.

"This does suggest a little bit of optimism for manufacturing activity in October," said Lindsey Piegza, economist at FTN Financial in New York.

Growth in manufacturing had slowed earlier in the year and contracted in some regions, but recent data suggests it will continue to support the economic recovery.

New orders rose to 7.8 from minus 11.3, while shipments climbed to 13.6 from minus 22.8. The employment components were mixed, with the gauge of the number of employees easing to 1.4 from 5.8 and the average work week index gaining to 3.1 from minus 13.7.

U.S. stocks added to gains immediately after the data, the euro briefly gained against the dollar in volatile trade and 30-year bond prices dropped.

Survey respondents' view on the coming months perked up with the gauge of business conditions for the next six months rising to 27.2 from 21.4.

(Reporting by Leah Schnurr, additional reporting by Emily Flitter; Editing by Kenneth Barry)