Another Federal Reserve survey showed economic activity and pricing power rebounding from a post-Hurricane Katrina pause Thursday, further vindicating policymakers who embraced interest rate hikes at their last meeting.

Regional manufacturing activity rebounded in the Philadelphia Federal Reserve's business outlook survey for October, one month after falling off a cliff in the aftermath of the Gulf Coast storm.

"Indicators for general activity, shipments, new orders, and employment all improved from their readings in September," the Philly Fed report said. "Expectations for future growth recovered from the low readings recorded last month just after Hurricane Katrina hit."

The survey's most closely watched gauge, the diffusion index of current activity, rose to 17.3 in October from 2.2 the month before. The jump returns the index to near its level of August, the Fed noted, and was a solid 7 points above estimates.

Meanwhile, the report's current prices-paid component rose 15 points to 67.6, its highest reading since November 1980. No firm surveyed by the bank reported lower input prices during the month. Companies had more success passing along the costs to consumers, with 33% reporting higher prices for their goods, up from 22% in September.

On Wednesday, the Fed's beige book survey of U.S. economic activity found most of the 12 regional banks reporting "moderate or gradual" growth last month. That news sparked a 100-plus rally on the Dow Jones Industrial Average.

The stock market had virtually no reaction Thursday. In recent trading, the Dow was down 30 points to 10,385. Bond prices eased.

Elsewhere in the report, new orders rose from -0.5 in September to 18.6, while the current employment index jumped by 14 points. An index of future employment was little changed at 11.3.

"Firms' outlook for future employment held relatively steady this month, although businesses were more optimistic about expanding the work hours of existing employees," the report said. Nineteen percent of firms surveyed expect increases in employment over the next six months, while 8% expect decreases.

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