ISM Index of Manufacturing in U.S. Rose to 61.4 in February

U.S. manufacturing accelerated in February to the fastest pace since May 2004, a sign that factories are ramping up production to meet demand.

The Institute for Supply Management’s factory index increased to 61.4 from 60.8 in January, the Tempe, Arizona- based group said today. Readings greater than 50 signal growth. In Europe, manufacturing expanded at the fastest pace in more than 10 years, while the rate of growth at factories in China was the slowest in six months.

Business investment in new equipment is prompting U.S. companies like Eaton Corp. and Deere & Co. to raise profit forecasts as the global economy expands. Federal Reserve Chairman Ben S. Bernanke told Congress today that while economic growth will pick up, there needs to be a “sustained period of stronger job creation.”

“We anticipate further gains will be seen in manufacturing data,” Maxwell Clarke, chief U.S. economist at IDEAglobal in New York, said before the report. “The improved pace of domestic business activity will continue over the course of 2011.”

The median estimate called for an increase to 61, according to the Bloomberg survey of 77 economists. Forecasts ranged from 58.7 to 63.3.