Manufacturing in the U.S. Expanded at a Faster Pace in October

 By Shobhana Chandra, Bloomberg.com

Nov. 2 (Bloomberg) -- Manufacturing in the U.S. expanded in October at the fastest pace in more than three years, a sign that factories will be the main driver of the expansion in coming months.

The Institute for Supply Management’s factory index rose to 55.7, the highest level since April 2006, from 52.6 in September, according to the Tempe, Arizona-based group. Readings above 50 signal expansion.

Rising sales, boosted in part by the administration’s “cash-for-clunkers” plan, have led to a record plunge in stockpiles that’ll keep assembly lines humming. While more than $2 trillion in global stimulus will also lift overseas demand, mounting joblessness signals consumer spending will be slow to recover, restraining the expansion.

“Aggressive inventory liquidation in the first half of the year and stabilizing orders suggests that manufacturing output will continue to be better supported in coming months,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm, said before the report.

Economists projected the index to rise to 53, the median of 70 projections in a Bloomberg News survey. Estimates ranged from 52 to 55.