Business activity in the U.S. mid-Atlantic region improved in August, but local employment deteriorated to its worst level in seven years, a survey from the Philadelphia Federal Reserve released on Thursday showed.

The Philadelphia Fed said its current business activity index rose to 2.0 in August from -2.9 in July. The August figure matched the median forecast among economists polled by Reuters.

A reading above zero indicates expansion in the region's manufacturing. The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware.

The survey's six-month outlook measure rose for a second month to 45.8 from July's 33.7. August's reading was the highest since January 2015.

The Philadelphia Fed regional business index is seen as one of the first monthly indicators of the health of U.S. manufacturing, leading up to the national report by the Institute for Supply Management.

While the current activity measure rose, two components tumbled, which underscored the lingering weakness in U.S. mid-Atlantic business activity.

The employment index dropped to its weakest since July 2009 to -20.0 from -1.6, while the new orders index fell to -7.2, the lowest since December, from 11.8 the prior month.

"The diffusion index for current general activity moved from a negative reading to a marginally positive reading, while the indicators for new orders and employment suggested continued general weakness in business conditions," the Philadelphia Fed said of the latest survey.