U.S. manufacturing surged in October, marking the second month in 2014 it reached 59 on the Institute for Supply Management's PMI Composite index. Plus, production hit a 10-year high, and new orders rose 10 points.

The index reading of 59 matched that of August and was the highest reading since March 2011. October marked the 17th consecutive month the manufacturing sector expanded and the 65th straight month the overall economy grew.

With the holiday season approaching, analysts say these figures, combined with lagging production in overseas markets, put the U.S. manufacturing sector in a "sweet spot."

"This is a robust manufacturing sector that has room for growth to close out 2014," said Joseph Brusuelas, chief economist at McGladrey, told Investor's Business Daily. "I see strong backlogs, robust production and new orders that all suggest manufacturing and industrial production are poised to accelerate."

Any reading above 50 on the ISM's composite index is indicative of expansion in the manufacturing sector. The index needs to be in the 60s in order to see substantial job growth across the sector.

Every month, ISM surveys manufacturers and publishes individual respondents' comments, such as these:

• "Holiday orders are exceeding seasonal forecasts. Customers are demanding additional quantities above prior orders. Fuel costs and other positive signals appear to be creating demand above normal."
• "We continue to see strong demand across multiple sectors."
• "Business conditions are good; sales and production volumes are generally increasing."

Other respondents were just as upbeat, citing "strong business" and increased holiday orders that exceeded seasonal forecasts.

Of 18 manufacturing industries, 16 reported growth in October, led by producers of plastics, textiles and metals. The manufacturing sector is being bolstered by strong automobile sales, lower gas prices and steady job growth. Ford, Toyota, Fiat-Chrysler and Nissan reported sales that exceeded forecast estimates.

Manufacturing employment is also growing. The ISM employment gage hit 55.5 in October, which exceeded many analysts' projections. Twelve of 18 manufacturing industries reported employment growth in October. Textiles, apparel and leather led the way in growth while the print, furniture and paper industries also fared well.

Three industries reported a decrease in October's employment figures. Those industries were computer products, primary metals and petroleum/coal.

Exports were the only weak link in the ISM October survey. Down 2 percentage points to 51.5, manufacturing exports had been expanding for the past 23 months. China and Europe as a whole were barely above 50 on the PMI index for the month of October. Output shrank in Italy and France in October, and China's manufacturers are showing signs of slow down.

Other highlights from the ISM report include:

• The new orders measure posted the second-best reading since August 2009 at 65.8.
• The prices paid index dropped to the lowest this year, which means manufacturers paid less for energy and raw materials.
• Government figures indicate spending is up only 1.4 percent for the year and dipped by 0.2 percent in September.