Manufacturing activity increased to its highest level in nearly 3 1/2 years in August and construction spending rebounded strongly in July, in further signs of vigor in the economy, Reuters reported.


The Institute for Supply Management said today its index of national factory activity rose to 59 last month, the highest reading since March 2011, and up from 57.1 in July.


A reading above 50 indicates expansion in the manufacturing sector. Economists had expected a pullback to 56.8. August's reading was boosted by a surge in the new orders gauge, which touched its highest level since April 2004.


Separately, the U.S. Commerce Department said construction spending increased 1.8 percent to an annual rate of $981.31 billion, the highest level since December 2008.