US manufacturers cranked up output in October to the fastest pace in nearly four years, according to a report that showed hard-hit factories enjoying their best rebound since the 2001 recession.
Separate government data showed construction spending hit record-highs in September, suggesting that overall third-quarter growth, which came in at the strongest pace in two decades, could be revised even higher.
Car and truck sales ran a little below forecasts in October after near-record gains in recent months, showing that retail sales will likely cool heading into the end of the year after the big consumer spending splurge in the third quarter.
Still, most economists believe the recent burst of economic activity should maintain momentum going forward and spur job gains - perhaps putting the final pieces in place for a full-fledged expansion.
"Employment is in the process of turning," said Jade Zelnik, chief economist at RBS Greenwich Capital.
The Institute for Supply Management said its October purchasing managers' index jumped to 57.0 - the highest since January 2000 - from 53.7 in September, beating forecasts. Any reading above 50 points to growth in the sector, which makes up less than a fifth of the overall economy.
Many of the ISM survey's components pointed to strong growth going forward. New orders poured in at the quickest pace in four years, rising to 64.3 in October, compared with 60.4 the prior month.
Backlogs of orders also rose, while the dollar's weakness and better demand from abroad boosted exports. Even as orders for goods kept streaming in, cautious factories cut back on already lean inventories. To meet that demand, production will have to head higher.
The burst of growth and production helped push the ISM employment index to its highest level in 10 months, to 47.7 from 45.7. Although that level means a slower pace of layoffs, some economists said it also suggests light hiring by manufacturers.
The report provided good news heading into Friday's payrolls data, which are expected to show a 55,000 increase in October after rising 57,000 in September - though those gains are not big enough to pull down the unemployment rate.
Factories have suffered the most in the recession and stumbling recovery, losing more than 2.5 million jobs. Those layoffs have made manufacturers' complaints blaming China's currency policy for worsening their problems a hot political issue heading into next year's US presidential election.
Despite the recent burst of growth, the economy remains plagued with plenty of excess production capacity and job losses following the 1990s boom. Federal Reserve officials have pledged to keep the Fed's target rate at a 45-year low of one per cent until that extra capacity is soaked up.
"We are currently operating below potential. It will be some time before that output gap closes," Federal Reserve Bank of Chicago President Michael Moskow said on Monday.
Stocks were cheered by the news, with the S&P 500 up nearly one per cent. Safe-haven Treasuries tumbled, sending the benchmark 10-year note yield, which moves opposite to price, up to 4.37 per cent from 4.30 per cent.