Manufacturing expanded at a faster pace than forecast in August, signaling the industry that led the recovery will keep it from faltering, Bloomberg reported.

The Institute for Supply Management’s factory index rose to 56.3 from 55.5 in July. Economists had forecast a decline to 52.8, according to the median estimate in a Bloomberg News survey. Readings greater than 50 signal growth. Measures of production and employment increased.

Caterpillar Inc. is among manufacturers benefiting as companies replace aging machines, helping to support the expansion. The gains may partially compensate for a slowdown in consumer spending and sluggish housing market that are causing the U.S. economy to cool in the second half of the year.

“The manufacturing sector has maintained its momentum at least through August,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. The report “makes clear the economy is not slipping into recession any time but it’s still reasonable to be concerned about where we’re heading over the next three to six months.”

Companies in the United States unexpectedly cut employment in August, data from a private report based on payrolls showed. Employment fell by 10,000, according to figures today from ADP Employer Services.