NEW YORK (CNNMoney.com) -- U.S. manufacturing showed surprising strength in June, according to a closely watched survey of executives that showed factories at their highest rate of production in nearly three years and a pickup in new orders likely to keep them busy in the months ahead.
The Institute of Supply Management's monthly index came in at 56 in the month, after a 55 reading in May. Any reading above 50 indicates growth in the sector.
The overall index, which is based on readings in 11 different subindexes, was at its highest level since April 2006, according to the report. Economists surveyed by Briefing.com had forecast the index would stay unchanged at 55.
But some of the key subindexes in the report showed even greater strength.
The production reading jumped to 62.9 from 58.3, the fifth straight month that measure increased. The survey found 35 percent reporting increased production in the month, while only 10 percent trimmed their output. It was the highest production index number since July 2004.
Meanwhile the new orders portion of the report rose to 60.3 from 59.6 in May and the best reading since February 2006. The survey found 37 percent reporting a rise in new orders, and only 15 percent seeing a decrease.
"Following a weak first quarter, the manufacturing sector rebounded in a strong fashion during the second quarter," said Norbert Ore, chair of the group's Manufacturing Business Survey Committee. "This performance appears sustainable in the third quarter due to the current strength in new orders and production."
There was also a decline in the prices paid component, a measure of inflationary pressures, which retreated slightly to a reading of 68 from 71. While 42 percent still reported paying higher prices, that was down from 45 percent previously. 
