U.S. manufacturing grew last month at the fastest pace in 10 months, suggesting that the economy is healthier than recent data had indicated.
New orders, production and a measure of hiring all rose. The April survey from the Institute for Supply Management was a hopeful sign ahead of Friday's monthly jobs report.
The trade group of purchasing managers said Tuesday that its index of manufacturing activity reached 54.8 in April, the highest level since June. Readings above 50 indicate expansion.
The sharp increase surprised analysts, who had predicted a decline after several regional reports showed manufacturing growth weakened last month.
The ISM manufacturing index is closely watched in part because it's the first major economic report for each month. April's big gain followed a series of weaker reports in recent weeks that showed hiring slowed, applications for unemployment benefits rose and factory output dropped.
"This survey will ease concerns that the softer tone of the incoming news in recent months marked the start of a renewed slowdown in growth," Paul Dales, an economist at Capital Economics, said in a note to clients.
The latest reading is well above the recession low of 33.1 and above the long-run average of 52.8. But it's still below the pre-recession high of 61.4.
A measure of employment in the ISM's survey rose to a 10-month high. That indicates that factories are hiring at a solid pace.
A gauge of new orders jumped to its highest level in a year. That could signal faster production in the coming months.
A separate report showed U.S. builders barely increased their spending on construction projects in March after two consecutive months of declines.
The 0.1% gain left construction spending at a seasonally adjusted annual rate of $808.1 billion, the Commerce Department said.
That's roughly half the level of what economists consider to be healthy.
