ISM jumps; Construction report likely canceled due to shutdown

A worker assembles a custom piece of furniture at the at Baker Road Furniture manufacturing facility in South Elgin, Illinois.
Tim Boyle | Bloomberg | Getty Images

The U.S. manufacturing sector last month expanded at its fastest pace in almost 2-1/2 years, an industry report showed on Tuesday. The Commerce Department's construction spending report, which had been expected at 10 a.m., was delayed due to the government's partial shutdown.

The Institute for Supply Management (ISM) said its index of national factory activity rose to 56.2 in September from 55.7 in August, marking its highest level since April, 2011. The report showed that firms added the most workers in 15 months during September.

Economists polled by Reuters had expected September's index to slip to 55. A reading above 50 indicates expansion.

Employment jumped to 55.4, its highest since June, 2012. It stood at 53.3 in August. The forward-looking new orders index, however, slipped to 60.5 from 63.2.

Economists forecast U.S. employers added 180,000 new jobs last month after hiring 169,000 workers in August.

Manufacturing slowed in the spring and contracted in May, according to ISM, as government spending cuts and weaker global demand caused headwinds for U.S. companies.

But sizable increases in the last few months have bolstered hopes that the sector is finding its footing.

The ISM report was clearly more upbeat than a separate manufacturing activity index released earlier on Tuesday by financial data firm Markit, which hit a three-month low in September and saw slower growth in employment and new orders.

The two surveys use some different methodologies, including one related to seasonal adjustment.

A Commerce Department spokeswoman said Monday the construction report wouldn't be released 10 a.m. Tuesday in the event of a shutdown.