In a report, the Federal Reserve Bank of Philadelphia said that its manufacturing index rose to 8.1 in December from October's reading of minus 10.7.
Analysts had expected the index to improve to a reading of minus 3.0 in December.
On the index, a reading above 0.0 indicates improving conditions, below indicates worsening conditions.
Following reported declines in business activity in late October and early November from the effects of Hurricane Sandy, most of the survey's measures showed notable improvement this month.
The survey's broad indicators of future activity also showed improvement this month
Following the release of the data, the U.S. dollar held on to losses against the euro, with EUR/USD adding 0.38% to trade at 1.3277.
Meanwhile, U.S. equity markets were modestly lower after the open. The Dow Jones Industrial Average shed 0.1%, the S&P 500 index dipped 0.1%, while the Nasdaq Composite index fell 0.1%.
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