The Purchasing Managers' Index climbed to 52.4 in the month, on a scale in which numbers above 50 indicate businesses are expanding.
In a weekly report released a day early, the Labor Department said 41,000 fewer first-time unemployment claims were filed in the week that ended Saturday, with initial claims falling to 410,000, the numbers still skewed in the wake of Hurricane Sandy.
By close of trading, the Dow Jones industrial average added 48.38 points or 0.38 percent to 12,836.89. The tech-heavy Nasdaq composite index gained 9.87 points or 0.34 percent to 2,926.55. The S&P 500 added 3.22 points or 0.23 percent to 1,391.03.
On the New York Stock Exchange, 2,041 stocks advanced and 980 declined on a volume of 2.6 billion shares traded.
The benchmark 10-year treasury fell 5/32 to yield 1.688 percent.
The euro rose to $1.283 from Tuesday's $1.2818. Against the yen, the dollar rose to 82.52 yen from 81.69 yen.
In Tokyo, the Nikkei 225 index added 0.87 percent, 79.88 points, to 9,222.52.
In London, the FTSE 100 index was flat, gaining 0.07 percent, 3.93 points, to 5,752.03.
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