WASHINGTON -- U.S. manufacturing grew in August at the strongest pace in more than three years as factories cranked out more goods and new orders rose.
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The Institute for Supply Management's manufacturing index rose to 59 from 57.1 in July, the institute said Tuesday. That was the highest reading since March 2011. Any measure above 50 signals that manufacturing is growing.
The gain in manufacturing was "broad-based," Bradley Holcomb, the Institute for Supply Management survey chairman, said during a conference call with reporters. There is not one particular driver, "it's just sort of a continuation of the trend that we've had since January."
Tuesday's Institute for Supply Management report coincides with other signs that manufacturing is helping drive the U.S. economy's improvement.
Factories are benefiting from strong demand for aircraft, furniture, and steel and other metals.
The boost from manufacturing has helped offset slower homebuilding, a slowdown in consumer purchases, and weaker spending on utilities and other services.
"The U.S. economy is on a notably firmer growth track this summer, even if consumers are riding in the caboose," Sal Guatieri, an economist at BMO Capital Markets, wrote in a research note.
The Institute for Supply Management's gauge of production rose to the highest level in four years, and a measure of new orders reached its highest point in 10 years. That suggests that the sector should grow more in coming months. Factories also added jobs last month, though at a slightly slower pace than in July.
U.S. manufacturers face some challenges overseas. A measure of export orders rose, but comments from several respondents to the Institute for Supply Management's survey said turmoil in Ukraine and slower growth in China were weighing on business.
A European manufacturing index fell to 50.7 in August, a 13-month low, according to a report Monday. And two surveys in China showed that manufacturing growth also slowed in August.
Bradley Holcomb, chairman of the Institute for Supply Management's manufacturing survey committee, said a big jump in orders for aircraft reported by Boeing in July could be feeding through to its suppliers and boosting the Institute for Supply Management's index of new orders.
Still, the strength in new orders is "broad-based at this time," Holcomb said.
The Federal Reserve has reported that factory output rose 1 percent in July, the sixth-straight monthly gain. Production of autos, furniture, textiles and metals all rose.
Orders for big-ticket factory goods such as autos and appliances also soared in July, though the gain reflected mainly a jump in demand for Boeing's commercial aircraft. Such orders tend to be volatile from month to month.
Excluding the transportation category, orders actually slipped last month. And a key category that serves as a proxy for business investment plans fell 0.5 percent. But that dip followed a big 5.4 percent gain the previous month.
Greater consumer spending may be needed to keep driving factory growth. Consumers cut back their spending 0.1 percent in July, the government said, the first decline since January. The decline was led by lower spending on autos.
The U.S. economy grew at a 4.2 percent annual rate in the April-June quarter, the government said last week. That was much better than the 2.1 percent contraction in the first three months of the year.
U.S. construction spending staged a strong rebound in July, rising by the largest amount in more than two years.
All major categories of construction showed gains in an encouraging sign that spending on building projects will help boost the economy in the second half of this year.
Construction spending rose 1.8 percent in July, the biggest one-month gain since May 2012, the Commerce Department said Tuesday. It followed a 0.9 percent decline in June, the largest setback in a year.
That decline had been blamed in part on soggy weather, which depressed construction activity in many parts of the country.
The July rebound pushed total construction to a seasonally adjusted annual rate of $981.3 billion, the highest level since December 2008. Spending on housing, nonresidential and government projects all increased.
Construction spending is now 8.2 percent higher than it was a year ago as it continues to advance after a deep plunge during the recession when builders sharply cut back because of a glut of unsold homes.
Information for this article was contributed by Chistopher S. Rugaber and Martin Crutsinger of The Associated Press and by Jeanna Smialek of Bloomberg News.
A Section on 09/03/2014