The overall economy grew for the fourth time after seven months of contraction, while the manufacturing sector expanded for the first time after 18 months of contraction, the Institute for Supply Management reported yesterday.
According to the ISM's monthly report on business, the ISM index gained to 52.9 in August from 48.9 in July.
Economists polled by Thomson Reuters predicted a 50.5 reading.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion. A reading of 50 shows the sector was unchanged in the month.
The closely watched prices paid index rose to 65.0 from 55.0. The employment index was at 46.4, up from 45.6 the prior month.
The production index increased to 61.9 from 57.9, the new orders index rose to 64.9 from 55.3, the supplier deliveries index climbed to 57.1 from 52.0, the export orders index increased to 55.5 from 50.5, and the imports index fell to 49.5 from 50.0.