NEW YORK (CNNMoney.com) -- The manufacturing sector surged in October, according to a purchasing managers' group report released Monday that far surpassed economists' expectations.
The Institute for Supply Management's manufacturing index hit 56.9 in October from 54.4 in September. The reading was expected to have eased to 54.
Growth in new orders improved significantly in October to 58.9 from 51.1. The employment index increased to 57.7 from 56.5, notching the 11th straight month of gains.
Economist Paul Dales of Capital Economics called the report "very encouraging."
"The chance that the economy is heading back into a recession has receded," he said.
However, he added, "the economy is not growing fast enough to reduce the unemployment rate or boost inflation."
Any reading above 50 signals growth. The October report marked the 15th straight month of expansion.
Dales said Monday's ISM figures will not prevent the Federal Reserve from announcing more quantitative easing on Wednesday, but increases the chances that a fairly modest package will be announced.
Stocks got a boost after the report's release, with the Dow Jones industrial average up about 100 points on the day before pulling back.
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