STRONG growth in the US manufacturing sector will add to the upbeat mood prevailing in the US following positive third quarter GDP data. <br /><br />The ISM manufacturing survey hit its highest level in three-and-a-half years in October, rising to 55.7 – the highest level since April 2006 – from 52.6 in September. This marked the third consecutive month that the survey has been above the 50 mark that indicates growth. <br /><br />However, economists noted that the ISM figure, which surveys manufacturers across the US, was at odds with many of the regional surveys released in the weeks ahead of the national figure.<br /><br />The strong ISM figure also masked some disappointing elements such as the second consecutive fall in the new orders index to 58.5 from 60.8 – indicating future potential weakness in factory activity. <br /><br />However, the production index jumped to 63.3, from 55.7, while the inventories index improved to 46.9, from 42.5. Capital Economics’ Paul Ashworth said: “Together, that supports our view that an increase in production and a much slower rate of inventory rundown, particularly in the car sector, will make big contributions to fourth-quarter GDP, offsetting some of the slowdown in consumption growth.” He added that the strong October ISM data supports his view that the pace of fourth-quarter GDP growth will be similar to the 3.5 per cent seen in the third. <br /><br />Further evidence of a sustainable economic recovery in the world’s largest economy came yesterday in the form of pending home sales contracts, which unexpectedly rose in September, marking the eighth consecutive rise in the index. <br /><br />US stock markets rallied strongly on the better than expected data, which offset investors’ fears of rising unemployment ahead of the US jobless figures out on Friday.