U.S. manufacturing activity hit a nearly 3-1/2-year high last month and construction spending rebounded strongly in July, signs the economy entered the third quarter on strong footing.
Tuesday's upbeat data added to reports on employment and housing that have suggested growth remains sturdy, despite a slowdown in consumer spending in recent months. "Things continue to fall into place for our view that growth should accelerate in the year's back half," said Dan Greenhaus, chief strategist at BTIG in New York.
The Institute for Supply Management (ISM) said its index of national factory activity rose to 59.0 last month, the highest reading since March 2011, from 57.1 in July. A reading above 50 indicates expansion in the manufacturing sector. Economists had expected a pullback to 56.8. August's reading was lifted by a surge in a gauge of new orders, which touched its highest level 10 years. Order backlogs and new export orders also rose.
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