Beating most analysts' expectations, manufacturing expanded for the 12th straight month in July.
However the Institute for Supply Management's manufacturing gauge dropped to 55.5 last month from 56.2 in June indicating a slower pace of growth.
"July marks 12 consecutive months of growth in manufacturing, and indications are that demand is still quite strong in 10 of 18 industries," the ISM's Norbert Ore said.
Analysts said the survey showed that despite the third straight month of slower growth, the sector would continue to expand at least in the short term.
"The ISM report shows that manufacturing activity is in the middle of the indexs growth range. Manufacturing activity is decelerating but the pace of growth is slowing from a rapid pace," said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. Production activity remains relatively robust and is less driven by the inventory swing and rebound in big ticket consumer goods. Production is now driven more by high tech, equipment investment, and exports.
"A reorientation of the U.S. economy more towards investment and exports is a positive direction," he added. "Surprisingly, the ISM report suggests that manufacturers are planning to add more workers. The increase in standard hours and overtime hours have allowed industrial firms to post strong growth without adding many workers; the ISM employment index indicates manufacturing firms plan to aggressively add people. Overall, the ISM report was very positive and is a relatively robust start to the second half of the year."
Copyright Agence France-Presse, 2010