Manufacturing in the U.S. expanded in October at a faster pace than projected as orders and production picked up, showing the industry is stabilizing.

The Institute for Supply Management's factory index climbed to 51.7 last month, the highest since May, from 51.5 in September, the Tempe, Arizona, group reported today. Economists estimated 51 for October, according to the median estimate in a Bloomberg survey. A reading of 50 is the dividing line between growth and contraction.

The report shows American factories are holding up amid a global economic slowdown that's weakened manufacturing from Asia to Europe. At the same time, companies such as Cummins Inc. are feeling the effects of the so-called fiscal cliff that's prompted cutbacks in equipment purchases.