U.S. manufacturing grows for 13th straight month

U.S. manufacturing expanded in August for the 13th straight month, lifting hopes that economic growth won't stall.

The Institute for Supply Management said Wednesday its manufacturing index rose to 56.3 in August from 55.5 in July. A reading above 50 indicates growth.

Manufacturing has helped lead the economy out of the worst recession since the 1930s. The trade group's index has surged since late 2009 and hit a 6-year high in April. But as economic growth has slowed this summer, expansion in the manufacturing sector has leveled off.

Another strong month at U.S. factories helped ease fears on Wall Street of a second recession. Stocks soared after the report's release. The Dow Jones industrial average rose more than 240 points in morning trading.

Investors overlooked another report that said construction spending in July tumbled to the lowest level in a decade. Construction activity dropped 1 percent in July, the third straight monthly decline, the Commerce Department said. Government revisions showed much weaker activity than previously reported for May and June.

Factories have seen rising demand for exports and from businesses that are investing in capital equipment and supplies.

Companies have been replenishing their stockpiles after cutting them during the recession.

And employers at factories are eager to add jobs. The August survey showed managers' desire to hire increased to 60.4 - the strongest level since December 1983.

Job gains at industrial companies have made up about 30 percent of net hiring by businesses and other private organizations in 2010. Manufacturing makes up roughly 10 percent of private-sector jobs.

Wednesday's report suggests that moderate growth will continue, said Norbert Ore, the chair of the survey.