U.S. factory activity expanded in July at the fastest pace in two years, fueled by surges in new orders, production and hiring The gains show manufacturing is rebounding and should provide a spark to growth in the coming months.

The Institute for Supply Management says its index of factory activity jumped to 55.4 in July, up from 50.9 in June. A reading above 50 indicates growth.

A measure of employment rose to its best level in a year. And a gauge of production soared 11.6 points to 65, the highest point since May 2004.

Manufacturing slowed earlier this year after providing crucial support to the economy after the recession ended in June 2009. The survey is one of several reports that suggest factories are recovering.

[Associated Press]

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