NEW YORK - U.S. factories were busier than expected in March and more manufacturers said they were willing to add workers, a hopeful sign for payrolls growth, according to a survey released on Thursday.
The Institute for Supply Management said its manufacturing index rose to 62.5 in March from February's 61.4, contrary to economists' expectations for a dip to 60.0.
A reading above 50 shows expansion. It was the 10th consecutive month of expansion in the sector that makes up less than a fifth of the U.S. economy. In January, the index stood at a two-decade high at 63.6.
"These numbers look good. Most parts of U.S. manufacturing seem to be faring well, in large part because inventories at the end of last year were at record lows, relative to sales. It's a bit of a rush to re-stock now," said Bob Gay, global head of fixed income strategy at Commerzbank Securities Research in New York.
ISM said the employment component of the index climbed to 57.0 versus February's 56.3. March's reading was the highest level since it hit 59.1 in December 1987.
A report on U.S. Midwest business activity on Wednesday showed growth slowed in March, while the employment component of that report, from the National Association of Purchasing Management-Chicago, fell sharply.
U.S. Treasury prices fell after the stronger than expected ISM data. The benchmark 10-year notes fell 13/32 to yield 3.89 percent, up from 3.84 percent at Wednesday's close.
Stocks were higher with the Dow Jones industrial average gaining 0.4 percent and the Nasdaq composite rising 1 percent.
The ISM index is compiled from monthly responses by purchasing executives at more than 400 industrial companies, ranging from textiles and chemicals to paper and computers.
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