The index, however, remains well below the peak of 60 reached in July last year.

The index is now well above the break-even level of 50, and points to a solid revival in the manufacturing sector.

We're hoping we've kind of reached the peak of this thing. Last year we didn't see the kind of increase we've been seeing before. Previous years it doubled or nearly doubled.

We may well have reached the peak of the economic cycle earlier in the year.

While the Index remains below its pre-Katrina levels, the shock of the hurricanes and subsequent leap in gas prices has begun wearing off just in time for the holiday season. Despite this latest boost in confidence, holiday spending will be driven by the bargains consumers have come to expect.

The manufacturing sector may be benefiting from the re-acceleration in global industrial production that is currently underway, and is evidently beginning to share more fully in the buoyant domestic economic conditions.