factory activity in the central atlantic region of the us expanded in october signaling that business conditions improved data from a survey compiled by the federal reserve bank of richmond showed tuesday the fifth district survey of manufacturing activitys composite index rose to 12 in october from minus three in september economists polled by the wall street journal expected the indicator to come in at 5 the index is compiled by surveying manufacturing firms across the fifth federal reserve district which encompasses the district of columbia maryland north carolina south carolina virginia and most of west virginia positive readings signal expansion while negative readings indicate contraction the three component indexes which form the composite indicatorshipments employment and new ordersincreased in october compared with the prior month the richmond fed said the shipments index rose to one in october from minus one the previous month the volume of new orders index increased to 10 from minus 19 and the employment index increased to 27 from 20 the prior month survey results indicate that many manufacturing firms increased employment and wages in october but finding workers with the necessary skills was difficult respondents expected this challenge to continue the richmond fed said manufacturers continued to see low inventories backlogs of orders and lead times indexes continued to grow as the vendor lead time index hit its highest value on record the report said goods producers in the area were optimistic that conditions will improve in the coming months but expected inventories to remain low for some time the future index for shipments decreased to 33 from 40 and expectations for employment fell to 45 from 52 while the future new orders index rose to 27 from 24