WASHINGTON (Bloomberg) - Manufacturing in the Philadelphia region expanded in February for a sixth straight month as orders surged to the highest level in more than five years, another sign that factories are leading the economic recovery.

The Federal Reserve Bank of Philadelphia's general economic index rose to 17.6 from 15.2. Readings greater than zero signal growth. Measures of employment and shipments accelerated, and inventories expanded for the first time since September 2007.

Surging exports, inventory replenishment and corporate spending on new equipment are fueling a factory-led recovery from the worst recession in seven decades.

The manufacturing expansion may spur the labour market recovery needed to boost consumer spending and keep the economy expanding.

"The inventory cycle will continue to add to production levels well into 2010," said Robert Stein, a senior economist at First Trust Portfolios LP in Wheaton, Illinois. "Manufacturing is doing well pretty much across the board."

A separate report from the Conference Board yesterday showed the index of US leading indicators rose in January for a 10th straight month, pointing to an economy that will keep expanding through the first half of this year.

The Standard & Poor's 500 Index increased 0.2 percent to 1,101.53 at 11.11 a.m. in New York. The 10-year Treasury note fell, pushing up the yield five basis points to 3.78 percent.

Other reports from the government showed jobless claims rose by 31,000 to 473,000 last week, while wholesale prices increased 1.4 percent in January after a 0.4 percent gain in December.