"Most of the survey's broadest current indicators were positive this month, suggesting an improvement in business conditions," the Fed said.
The Fed also said its monthly survey indicated respondents were more optimistic about future business conditions, as well.
Growth is expected over the next six months, the Fed said.
The business survey, taken midway through the month, found its broadest index, the diffusion index of manufacturing activity, rose from minus 5.2 in May to 12.5, which indicates business activity is expanding.
The component index for new orders dropped from minus 7.9 to 16.6. The shipments index also turned from negative to positive, climbing 13 points to 4.1.
The index measuring the number of hours "showed continued weakness" in the labor market, the Fed said. The hours worked index rose three points but showed continued contraction at minus 5.4, marking a third consecutive month in decline.
In the month, 20 percent of respondents indicated their firms were dropping employees, while 15 percent indicated their payrolls were growing, the Fed said.