With campaigning for the November presidential election in full swing, the White House hailed the ISM report.

"Today's report is yet another positive economic indicator that shows that our economy is on the right track," U.S. Commerce Secretary Donald Evans said in a statement.
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"Today's (ISM) report provides further verification of the strong state of U.S. manufacturing," said Thomas Duesterberg, president of the Manufacturers Alliance/MAPI in Washington.

Second-half growth would be fueled by strong business equipment investment, purchases of high technology durable goods and robust exports, he said.

"I'm not raising my expectations for the second half, but certainly July gets the second half off to a very strong start," said Norbert Ore, chairman of the ISM manufacturing business survey.

Any reading above 50 in the ISM index indicates growth. The index has been above 50 for 14 straight months and above 60 for the past nine months -- the longest stretch since 1973-74.

The employment component of the ISM index slipped to 57.3 from 59.7 in June but still suggested that Friday's monthly U.S. payrolls report might show factory hiring in July.