Manufacturing flashes strength

@CNNMoney October 3, 2011: 11:06 AM ET

NEW YORK (CNNMoney) -- Manufacturing activity continued to expand in September, providing markets with a rare piece of positive economic news.

The Institute for Supply Management, a purchasing managers' group, said Monday its manufacturing index registered 51.6 last month, up 1 point from August.

The index has been above 50, the level indicating expansion in the sector, for 26 months.

Economists were anticipating weakness in U.S. manufacturing. According to a survey by Briefing.com, the index was expected to register at 50.5.

While the report was better than expected, the sector remains close to slipping into contraction.

"There is general relief in terms of the overall economy," said John Silvia, an economist at Wells Fargo. "We're not picking up momentum, but we're not losing ground either."

Fix housing, fix the economy

And in this economy, that's what passes as good news.

"The modest rebound in the ISM manufacturing index ... demonstrates that the economy hasn't fallen off a cliff," Paul Ashworth, chief U.S. economist at Capital Economics, wrote in a research note.

One key component of the index -- new orders -- was unchanged at 49.6, a third straight month of contraction.

Meanwhile, employment numbers provided a bright spot, ticking up 2 points over the previous month to 53.8, a reading consistent with an expanding market for manufacturing jobs. To top of page

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