Manufacturing sector grows at best pace in 1-1/2 yrs in Feb-ISM

The pace of growth in the U.S. manufacturing sector picked up to its fastest rate in over a year and a half in February as new orders continued to accelerate, an industry report showed on Friday.

The Institute for Supply Management (ISM) said its index of national factory activity rose to 54.2 from 53.1 in January, topping economists' forecasts for a pullback to 52.5. It was the highest level since June 2011.

A reading above 50 indicates expansion in manufacturing. The sector lost traction in the second half of last year and contracted in November in the wake of the massive storm that hit the U.S. Northeast.

The new orders index jumped to 57.8 from 53.3, making for the highest level since April 2011. The gauge of production gained to 57.6 from 53.6, while inventories edged up to 51.5 from 51.

But the employment component slipped to 52.6 from 54.

In a sign of potential pressures emerging for companies, the prices paid index rose to the highest in a year to match 61.5 seen in February 2012, up from 56.5.

(Reporting by Leah Schnurr)