By Greg Robb, MarketWatch WASHINGTON (MarketWatch) — The Empire State manufacturing index rose to 20.2 in March, the New York Federal Reserve Bank said Thursday. This is the fourth straight increase after the index had sunk below zero from June through October. The gain in March surprised analysts. Economists polled by MarketWatch expected the index to slip to 17.7 in March. Underlying conditions were mixed. The new orders and shipment indices retreated slightly in March. The new orders index slipped to 6.8 in March from 9.7 in February. The shipments index fell to 18.2 from 22.8 in the prior month. The two readings on employment were stronger. The index for the number of employees increased to 13.6 in March from 11.8 in February. The inventories index rose to zero from negative 4.7, suggesting that inventory levels held steady. There were hints of rising inflationary pressure in the report. The index for prices paid surged by 25 points to 50.6, its highest level since last June. A reading of expected conditions in six-months retreated slightly for the second straight month. The Empire State data are closely watched, because they are one of the first readings of the health of the manufacturing sector. Analysts put more weight on the Philadelphia Fed’s index of current activity, which will be released later on Thursday. A broader factory index, prepared by the Institute for Supply Management, is considered one of the most informative economic indicators. It will be released on April 2. Last month, the ISM factory survey unexpectedly slipped to 52.4 from 54.1 in January.

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