Manufacturing activity in the Philadelphia area continued to improve this month, reaching its highest level since April 2005, according to a survey released today by the Federal Reserve Bank of Philadelphia.

The broadest gauge in the bank's monthly Business Outlook Survey rose to 24.3 from 22.5 in November and now has been above zero for three straight months. An index level above zero indicates growth in manufacturing, while negative numbers reflect contraction. The index was at 25.5 in April 2005.

"All of the broad indicators remained positive and reflect an expansion of activity," the Fed said. "The demand for manufactured goods is showing continued improvement."

New orders, a key component of the overall manufacturing index, rose four points in December. Though another significant part, the index for shipments of finished products, declined this month, it remained above zero for the third consecutive month.

Also, the survey found, more manufacturers reported an increase in employment this month (17 percent) than reported a staffing decline (12 percent).

Signs of higher prices were more widespread in December than in prior months, as a growing number of area manufacturers said they were paying more for their raw materials and were charging more for their finished goods.

The Fed's survey covers manufacturers in the eastern two-third of Pennsylvania, the southern half of New Jersey and throughout Delaware.    - Paul Schweizer