WASHINGTON (AFP) - US manufacturing activity heated up in July in the second straight month of growth, according to a monthly survey released on Thursday.

The Institute for Supply Management said its purchasing managers index for the manufacturing sector jumped to 55.4 in July, a solid 4.5 percentage points higher than the June figure.

The PMI reading was well above the average analyst prediction of 51.5 and the strongest level of the year.

The PMI index has been above 50 - expansion territory - every month except May, when it dipped to 49.0. A reading below 50 indicates a contraction.

Based on a survey of 18 manufacturing industries, the July PMI index showed a powerful 11.6 point increase in production.

New orders, pointing to further growth, rose 6.4 points to 58.3.

Employment in manufacturing rebounded from a two-month contraction, gaining 5.7 points at 54.4.

Inventories and prices, however, fell into contraction territory.

"Comments from the panel generally indicate stable demand and slowly improving business conditions," said Bradley Holcomb, chair of the ISM manufacturing survey committee.