The U.S. manufacturing sector grew last month at its fastest pace in more than two years, bolstering expectations for faster overall U.S. growth in the second half of the year, an industry report showed on Tuesday.
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The Institute for Supply Management (ISM) said its index of national factory activity rose to 55.7 in August from 55.4 the prior month, comfortably beating expectations for 54. It was the highest reading since June 2011.
A reading above 50 indicates expansion in the sector.
New orders also marked their best level in more than two years, with that sub-index jumping to 63.2 from 58.3. Employment, however, slipped to 53.3 from 54.4.
The government will release its August employment report on Friday. Economists forecast employers added 180,000 new jobs last month after hiring 162,000 workers in July.
Manufacturing has been hurt this year by cuts in government spending and weaker global demand, causing the sector to shrink in May. But sizable increases in activity in July and August are adding to economists' views that U.S. goods-producing companies are finding their footing as the year wears on.
Data last week showed the economy grew at a quicker-than-expected pace in the second quarter and should continue to gain momentum.