Business at U.S. manufacturers expanded in April at the fastest pace in 10 months that topped economists' expectation, according to a closely watched survey of the sector released Tuesday.
The Institute of Supply Management's survey of manufacturing purchasing managers advanced to 54.8 percent in April, from March's reading of 53.4 percent. Economists surveyed by Thomson Reuters had expected the index to decline to 52.8 percent. Any reading above 50 percent indicates improvement in the sector.
Manufacturing accounts for about 12 percent of the U.S. gross domestic product.
Sixteen of the 18 industries reflected overall growth in April. The new orders index registered 58.2 percent in April, an increase of 3.7 percentage points when compared to the March reading of 54.5 percent. The prices index for raw materials remained at 61 percent in April, the same rate as reported in March.
The ISM survey also found production and employment in the sector expanding at a faster pace in April.
Non-metallic mineral products, primary metals, and plastics and rubber products industries reported the biggest increase in employment.
Elsewhere, manufacturing shrank in the U.K. as export orders declined the most since May 2009, suggesting the U.K. has begun the second quarter in a weaker position than the first quarter. By contrast, the official Chinese manufacturing PMI rose to 53.3 last month, its highest in more than a year, from 53.1 in March. The improvement supports economists' view that China's economic growth would likely exceed the 7.5 percent growth rate Beijing is targeting this year.
Following the ISM release, U.S. Treasuries prices reversed early losses, while equities recouped some Monday losses.
In Tuesday morning trading, the Dow Jones Industrial Average gained 66.83 points, or 0.51 percent, to 13,280.46. The Standard & Poor's 500 Index added 10.47 points, or 0.75 percent, to 1,408.38. And the tech-heavy Nasdaq Composite Index rose 25.64 points, or 0.84 percent, to 3,072.00.