After a few months in the red, U.S. manufacturing managed to struggle back into expansionary territory last month despite rumbling uncertainty over everything from the world economy to the impending presidential election. The Institute for Supply Management released its monthly Purchasing Managers Index on Thursday as observers hoped manufacturing could bust out a second straight month of expansion. While the results from overseas weren't quite so good, the U.S. data showed some optimistic signs.

Cautious optimism
The PMI managed to break past the vaunted mark of 50 last month -- with scores below 50 representing manufacturing contraction and above 50 indicating expansion. Still, a score of 51.5 ranked nowhere near sector levels earlier this year. Unfortunately, in Thursday's report, while manufacturing managed to continue (and even accelerate) its gains, it still hasn't approached levels where analysts can say the economy is moving ahead at full throttle.

The ISM released October's PMI at a score of 51.7, expanding just slightly faster than September's mark. Economists had predicted little change, but even so, the news managed to send the Dow Jones Industrial Average(^DJI -0.53%) on a tear yesterday. The economy also expanded for the 41st consecutive month and hasn't touched contraction territory since the depths of the recession. Because the PMI is often seen as an indicator of future economic activity, October's mark looks promising for the next few months.

While it's undoubtedly good that manufacturing is headed up, October's result isn't even in the same area code as gains made earlier this year. The U.S. PMI consistently came in higher than 52 for the first five months of 2012, reaching a high of 54.8 in April. Still, given a three-month period of contraction from June to August, it's nice to be getting some good news from the backbone of the economy.

It's not all good news, however. Trends didn't look so optimistic internationally. Chinese manufacturing did manage to find a spark, reversing course from the country's recent economic woes and posting expansion in October. The eurozone wasn't so lucky, as its PMI reached a 40-month low. The index continued its slog through recessionary territory with an October mark of 45.8, falling below estimates and giving little hope to a region already under siege. Given the trials of major manufacturers such as Ford (F -0.19%) and General Motors (GM 0.50%) in Europe -- the continent hit both companies hard in recent earnings reports -- the future doesn't look promising across the pond.

While optimism is in short supply on the other side of the Atlantic, Thursday's report did highlight some key areas where the U.S. is on the upswing.

You win some, you lose some
In a concerning trend, order backlogs hastened their decline in October as inventories, which had grown in September, remained unchanged across the ISM's report. While it seems at first glance that manufacturers are holding back in the face of economic uncertainty, a pair of strong growth points should ease concern.

New orders and production both advanced strong in October, the latter jumping up from contraction territory last month. While the leap in production could simply suggest purchasing managers hastening to crank out products while companies continue to slash their backlog, the increase in new-order growth looks as if companies want to bulk up for the future -- particularly in light of poor export numbers for the month, which continued contracting for a fifth straight month.

On the small scale, however, a few industries should be worried. The ISM's report notes that prices are still down for steel and steel products, which won't help the likes of beleaguered companies such as U.S. Steel (X -2.60%). The company actually thrashed analyst expectations in a recent earnings release and saw its stock jump accordingly, but shares of U.S. Steel have still fallen more than 23% year to date. Considering the ongoing crisis in Europe and the Chinese economy's fragility, it's hard to imagine any big pop for the steel industry at large in the near future.

Metal products as a whole declined for the month, with one purchasing manager surveyed by the ISM saying, "We see a general softening in the steel and automotive markets in the fourth quarter." That's not good news for the aforementioned Ford and GM, but other industries have fared much better.

Chemical products managed to post expansion for the month despite the notorious earnings miss of DuPont (DD). One manager urged caution in the growth, however, saying that "Europe is still very much a concern." Both DuPont and rival Dow Chemical (DOW) have launched aggressive cost-cutting moves to stem the bleeding, however, and continued gains in their industry could lead to good things down the road.

Not great, but good
Overall, it could have been worse for American manufacturing in October, particularly in light of the dismal crop of reports from overseas. While an equal number of industries reported expansion and contraction for the month, the increase in new orders and accelerated growth in production should pay off in the near future. If nothing else, domestic manufacturing has received a shaky, but clean, bill of health. I wouldn't bet the farm on the small upswing, but if you're confident in the continued growth of the economy, now could be a great time to get in before manufacturing output accelerates.