Gains in manufacturing boosted the U.S. expansion in August, led by a surge in orders for plastics and metals that powered the world's largest economy past a global slowdown.
The Institute for Supply Management's index unexpectedly climbed to 59, the highest level since March 2011, from July's 57.1, beating all forecasts in a Bloomberg survey of economists. The orders gauge was the strongest in a decade, the Tempe, Arizona-based group reported Sept. 2.
American factories are benefiting from a rebound in auto sales and stronger business spending on new plants and equipment that are helping industries rise above the political tensions weighing on Europe. Faster wage growth is now needed to sustain the advance and broaden household purchases beyond automobiles.
“The manufacturing sector is just on fire right now,” said Brian Jones, a senior U.S. economist at Societe Generale in New York, whose ISM forecast at 58.5 was the highest in the Bloomberg survey. “You've got increased demand for workers, and the more people working, and the more money they are making, the more money they'll spend.”