Chicago Data, Orders Spell Factory Rebound As Sentiment Bounces 18-Yr Best For Productivity Recovery's stars aligned as consumers, business point to renewed growth.(A)

Byline: IBD STAFF AND WIRE REPORTS

U.S. manufacturing, hit hardest during last year's recession, is coming back, reports released Friday showed.

Combined with unusually powerful productivity gains and soaring consumer confidence, the data show a sound economic recovery shaping up -- at least for the troubled factory sector.

"This is all positive news," said Lynn Reaser, chief economist at Banc of America Capital Management. "It should give skeptics some evidence that the economic recovery in the United States is in fact going to have staying power."

Four reports Friday helped bolster views that the Federal Reserve might raise rates in August. The Fed is slated to discuss interest rates on June 25 and 26.

Manufacturing in the Midwest jumped to a 3-year high in May, according to the National Association of Purchasing Management-Chicago. Its index surged to 60.8, the highest level since April 1999, from 54.7 in April.

The reading in May marked the fourth-straight month above 50, which points to a growing regional factory economy. A reading below 50 signals contraction.