The Philadelphia Federal Reserve’s business activity index surged from a negative reading to 12.4 in March.
It was the first positive reading in seven months, and the highest level since last June.
Economists had estimated that the headline index improved to -1.5 from a reading of -2.8 in the prior period, according to Bloomberg.
The new orders index rebounded sharply, jumping 21 points to 15.7.
BNP Paribas’ Laura Rosner suggested that the improvement may be in part because of the softer dollar, which would, in theory, make exports more attractive.
“It is unclear exactly why there was such a significant shift in activity between February and March, but the improvement supports our view that we are moving past the weakest period for the manufacturing sector,” said JP Morgan’s Daniel Silver in a note. “It is likely that we are now past the biggest drags from the stronger dollar and inventory correction.”
Earlier this week, the separate Empire State manufacturing index from the New York Fed turned positive for the first time since last July.
In the special question for the month, firms were asked about their capital-expenditure plans for the year compared to 2015. Over 46% of companies said they planned to increase spending year-over-year.
“Expected high sales growth and the need to replace capital goods were the most cited reasons for the increase,” the release said. “Among the firms that do not plan to increase capital spending, the most cited reasons were low sales growth and low capacity utilization.”