NEW YORK: The New York Federal Reserve said on Monday its gauge of business growth in New York state recorded its biggest increase in more than two years in July, returning to positive territory to suggest regional activity was expanding again.

The index's increase reversed the prior month's record 26 point drop that had stoked concerns about a sudden contraction in business activity across New York state.

US business sentiment has been bogged down by trade tensions between the United States and its major trading partners. Some of those concerns have been offset by hopes the Federal Reserve would lower short-term interest costs to boost borrowing and demand.

The regional Fed's "Empire State" index on current business conditions jumped to 4.3 points this month from -8.6 in June, which had been the first negative reading since October 2016.

For July, analysts polled by Reuters had forecast a reading of 2.0.

A reading above zero suggests an expansion in regional business activity.