Factory activity in the U.S. mid-Atlantic region rebounded sharply in June, offering hope that the manufacturing sector was regaining its footing after being hammered by disruptions to the supply chains and weak demand caused by the COVID-19 crisis.

The Philadelphia Federal Reserve said on Thursday its business conditions index jumped to a reading of 27.5 this month from -43.1 in May. Manufacturers reported a rebound in new orders, though labor market conditions remained depressed at factories in the region that covers eastern Pennsylvania, southern New Jersey and Delaware.

Manufacturers were fairly optimistic about business conditions over the next six months. The Philadelphia Fed survey's six-month business conditions index rose to a reading of 66.3 this month from 49.7 in May.

Its six-month capital expenditures index increased to 26.3 from a reading of 15.2 in the prior month.