Driven by production and employment gains, the manufacturing economy expanded by 3.1 percentage points in October, the highest rate of growth in three-and-a-half years and the third consecutive monthly gain, according to the latest report from the Institute for Supply Management (ISM).

The manufacturing purchasing managers index (PMI) jumped to 55.7 percent in October from 52.6 percent the previous month. On an annualized basis, the PMI would equate to a...