New York ? The manufacturing sector continued to rebound in March, an industry group reported Thursday, raising the prospect of more hiring at the nation’s factories.

The Institute for Supply Management said its manufacturing index registered 62.5 in March compared with a reading of 61.4 in February. The new reading was above the expectations of analysts, who had forecast a figure of 59.5.

An index reading above 50 indicates expansion, while one below 50 indicates that manufacturing activity is contracting.

The institute’s report, and another by the Labor Department Thursday showing new claims for unemployment benefits declined slightly last week, suggest the job market may be improving, setting the stage for the government’s release of March employment figures this morning.

“Almost all the indicators … point to a healthy rebound in manufacturing, which has been the Achilles heel for the economy in the past three years,” said Sung Won Sohn, chief economist for Wells Fargo & Co. “Even employment seems to have rebounded very nicely in the ISM report, indicating that businesses are producing in order to meet demand.”

Analysts said the report showed the manufacturing sector had sustained momentum, with new orders strong, backlogs of orders increasing and production ramping up.

“It’s a good report,” said Gary R. Thayer, chief economist with A.G. Edwards & Sons in St. Louis. “There was some concern in the markets that the strength (in manufacturing) early in the quarter might have faded in the end of the quarter, but that does not appear to be the case.”

A similar report measuring manufacturing activity in the Midwest also was positive. Creighton University’s Mid-America Business Conditions Survey was 69.7. That was higher than last month’s 64.2 and the highest recorded since the survey began in 1994, said Creighton University economist Jim Knudsen.