A closely watched measurement of U.S. manufacturing activity inched to its highest level of the year in August.
The Institute for Supply Management's purchasing managers index ticked from 55.4 percent in July to 55.7 in August, indicating the third consecutive month of expansion in the U.S. manufacturing sector.
The slight increase "from an already elevated level in July points to a sharp pickup in manufacturing production," Daniel Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation, wrote on the group's website.
The ISM's August new-orders index increased by 4.9 percentage points to 63.2 percent – its highest level since April 2011 – and the production index decreased by 2.6 percentage points to 62.4 percent. Still, both indices point to three consecutive months of growth for their respective metrics.
"The August report reveals a surge in new orders and fast growth in manufacturing production," Meckstroth wrote. "Only 12 percent of the monthly reports over the last 20 years had a production index at or above the August level."
Although the ISM's August employment index dropped by 1.1 percentage points from July, it remained at a level indicating that hiring in manufacturing grew for the second straight month.
Of the 18 manufacturing sectors, 15 reported growth in August, according to the ISM's monthly survey.
Based on the ISM's latest survey data, Meckstroth asserted that an upward revision of the Federal Reserve's July industrial-production statistics is likely.
"MAPI believes a rebound in industrial activity is underway and manufacturing production is accelerating," Meckstroth said.
"The pickup is driven by strong growth in new housing starts that creates demand for construction materials. Also, firms are taking advantage of ultralow interest rates, while they last, and investing in business equipment, especially private-transportation infrastructure (railroad, trucks, aerospace). The main drag on the economy remains government austerity."