A reading above 50 indicates expansion in the sector.
Export orders slipped to 53.5 from 54.5, though imports were stronger, rising to 57.5 from 56.0.
Hurt by government spending cuts and weaker global demand, manufacturing growth has been lackluster of late and the sector contracted in May.
But the pick up in July added to economists' views that the economy is on stronger footing for the last half of the year. Data on Wednesday showed the economy grew at a quicker than expected pace in the second quarter and should continue to gain momentum.
Surprise construction drop
U.S. construction spending unexpectedly fell in June, a possible sign that government budget cuts and a sharp rise in interest rates were weighing on the economy.
Construction spending dropped 0.6 percent to an annual rate of $884 billion, the Commerce Department said on Thursday.
It was the biggest decline since January, although the government revised upwards its estimate for construction spending in May.
A 1.1 percent drop in public sector outlays factored heavily in the decline.
The federal government enacted steep budget cuts in March, which are expected to squeeze state and local administrations that depend on funds from Washington. Federal construction fell 1.5 percent during the month, while outlays on state and local projects declined 1.1 percent.
The private sector also pulled back in June. Construction spending on homes was flat, while non-residential spending dropped 0.9 percent.
Long term interest rates began rising in May and spiked in June on expectations that the U.S. Federal Reserve would begin scaling back a bond-buying program later this year. The Fed on Wednesday noted that mortgage rates had risen in the United States.
Economists polled by Reuters had expected overall construction spending to rise 0.4 percent in June.