A gauge of the New York state factory sector showed growth for the first time since April 2008, signaling manufacturers could lead the U.S. economy out of the worst downturn in 70 years.

The New York Federal Reserve said its Empire State general business conditions index jumped to plus 12.08, the highest since November 2007, from minus 0.55 in July. Economists polled by Reuters had expected a figure of 3.00.

The survey of manufacturing plants in the state is one of the earliest monthly guideposts to U.S. factory conditions.

The latest reading is a clear indication that, on balance, business conditions had improved for New York State manufacturers, the New York Fed said.

The report's current and future components rose broadly, signaling conditions would continue to improve in the months ahead, the regional central bank said.

The report's new order index rose to 13.43 in August from 5.89 in July, while the shipments reading improved to 14.11 from 10.97.

Manufacturers cited the cost of employee benefits as their most serious problem, amid the debate on healthcare reform. A year ago they said the cost of resources posed the most serious threat.

The index of prices paid by the state's manufacturers rose to 13.83 from 10.42 in July, while the index of prices they received moved deeper into negative territory, to minus 12.77 from minus 8.33.

On the employment front, New York factories continued to fire workers and reduce work hours, albeit at a slower pace than in July.

The index of the number of employees stood at minus 7.45 from minus 20.83 in July, and the component on the employee workweek stood at minus 6.38 from minus 19.79.

The New York Fed's gauge of manufacturers' six-month outlook jumped, however, to 48.22 from 33.99 in July.

(Reporting by Richard Leong; Editing by James Dalgleish)