An index of New York manufacturing conditions fell to a two-year low in April, while rising oil costs pushed U.S. import prices up at their fastest pace in more than two years.

The Federal Reserve Bank of New York (search) said on Friday the general business conditions index of its Empire Manufacturing Survey fell sharply to 3.12 in April from an upwardly revised 20.18 in March, sharply below the consensus forecast of 19.

U.S. Treasury securities prices rose after the Fed survey on expectations the Fed will not need to speed up interest rate increases to head off inflation.

However, the Labor Department (search) said U.S. import prices (search) rose 1.8 percent in March, the biggest increase since January 2003.

Excluding a 10.6 percent jump in the cost of imported petroleum, import prices increased 0.3 percent.

Wall Street economists had expected import prices to rise 1.2 percent in March. Export prices rose 0.7 percent, more than double the expected 0.3 percent gain.

Over the past 12 months import prices have climbed a steep 7.1 percent, reflecting a 36.1 percent surge in the cost of petroleum that has stirred concerns over both inflation and a potential weakening in economic growth.

Earlier this month, the cost of light crude oil hit a record high above $58 a barrel, but it has since fallen sharply to nearly $50.

The cost of imported foods and beverages climbed 3.4 percent in March and prices for non-petroleum industrial supplies rose 1.1 percent. But auto import costs were flat, prices for capital goods dipped 0.1 percent and prices for consumer goods, excluding autos, fell 0.4 percent.