The US manufacturing sector expanded for a third consecutive month in October, with the index of activity at a stronger-than-expected 55.7 percent, a private survey showed Monday.
The Institute of Supply Management said its factory index, also known as the purchasing managers index, showed the highest rate of growth since April 2006.
The closely watched index based on a survey of supply executives rose from 52.6 percent last month and was stronger than market expectations of a figure of 53 percent. Any number above 50 indicates growth.
"The jump in the index was driven by production and employment, with both registering significant gains," said ISM survey chief Norbert Ore.
"Production appears to be benefiting from the continuing strength in new orders, while the improvement in employment is due to some callbacks and opportunities for temporary workers," said Ore.
"Overall, it appears that inventories are balanced and that manufacturing is in a sustainable recovery mode."
Among the sub-indexes in the survey, the employment index was 53.1 percent, marking a sharp turnaround from last month's level of 46.2 percent and suggesting that factories are starting to add jobs.
The sub-index of new orders was 58.5 percent, a slower pace of growth than the prior month. But the production index surged by 7.6 points to 63.3 percent, indicating factories are ramping up operations following the long recession.
"The recovery in manufacturing accelerated in October," said Ryan Sweet at Moody's Economy.com.
"The October ISM suggests the fourth quarter got off to a better than anticipated start. We expect real GDP (gross domestic product) to grow 2.5 percent at an annual rate in the final three months of the year, a slight moderation from the third quarter's 3.5 percent gain."
