U.S. manufacturing activity rose to its highest level in more than three years in October, a private research organization reported Monday, offering hope the nascent economic recovery could be sustained. The Institute for Supply Management (ISM) said its index of factory activity rose to 55.7 last month, the highest level since April 2006, from 52.6 in September. Analysts had expected a much smaller gain. It was the third consecutive month that the index was above 50, which reflects expansion of the manufacturing sector. A reading below 50 indicates contraction. The ISM said 13 of the 18 manufacturing industries it tracks expanded last month, led by petroleum and coal production, clothing, and furniture. Three industries shrank, and two were flat. Manufacturing employment grew for the first time in 15 months in October, rising to 53.1 from 46.2 the previous month. However, the index that tracks new orders (an indicator of future production) fell to 58.5 from 60.8 in September. "Overall, it appears that inventories are balanced and that manufacturing is in a sustainable recovery mode," said ISM manufacturing chairman Norbert Ore. The rebound in U.S. manufacturing reflects a global trend. Manufacturing in China, which saw the strongest growth of the world"s major economies in the third quarter, expanded for an eighth consecutive month in October. European surveys also showed growth despite the recent climb by the euro and pound currencies against the U.S. dollar, which makes European exports more expensive. --SPA
