RICHMOND -- Virginia factories operated at 85 percent of capacity in May, outpacing factories across the nation and continuing the rise in industrial activity that started earlier this year, the Federal Reserve Bank reported last week.

The state's plants worked at 82 percent of capacity in April and 79 percent in February. The bank did not collect March figures.

Nationally, factories ran at 80.2 percent of capacity in May.

Plants in the Fifth Federal Reserve District operated at 79 percent of capacity. That district covers Virginia, Maryland, West Virginia, North Carolina and South Carolina.

Christine Chmura, the economist who did the study, said the survey did not show a clear direction.

"The results of our survey of manufacturing activity in Virginia is sending mixed signals in May. In May-to-June comparisons, shipments and orders are down but the number of employes is up marginally. Capacity utilization has increased from 82 to 85 percent," Chmura said.

"The expectations of our respondents concerning manufacturing activity in the next six months is also mixed. On the one hand, more than half of the respondents expect their shipments and orders to increase from June levels.

"But at the same time, comparing our June responses with responses earlier this year, our respondents are less optimistic that further increases will occur in the level of general business activity in their nation and in their local area."

She said the survey did reveal some apparently contradictory trends.

The report showed that 55 percent of the Virginia producers expect shipments and new orders to rise in the next six months.

But 85 percent also said that during the May-June period their finished goods inventories either decreased or did not change.

In addition, 60 percent said they expected no change in finished goods inventories during the next six months while the other 40 percent expect them to decrease.

Typically, producers expecting a rise in orders build inventories to meet rising demand.

Another significant development was the lack of manufacturer interest in spending for plants and equipment. Only 9 percent of the respondents increased this spending last month while 91 percent either did not change spending or cut it.