Philly manufacturing activity recovers in Oct. (by Greg Robb)

WASHINGTON (MarketWatch) - Manufacturing in the Philadelphia region showed signs of recovery in October, the Federal Reserve Bank of Philadelphia reported Thursday. The Philly Fed diffusion index rose to 8.7 in October from negative 17.5 in September. This is the first positive reading in three months. Readings above zero indicate expansion. The increase was much larger than expected. Economists were expecting the index to improve only to negative 10.0. Underneath the headline, labor market conditions improved only slightly. The Philadelphia index has been weaker than the national data for the past two months. The Institute for Supply Management reported that its key reading of the health of the manufacturing sector rose to 51.6 in September from 50.6 in August.