U.S. businesses grew in February at the fastest pace in two decades, Bloomberg reported after the release of a key report.

The Institute for Supply Management-Chicago Inc. said today its business barometer rose to 71.2 this month, the highest level since July 1988, from 68.8 in January. Figures greater than 50 signal expansion. The gauge, which was projected to fall, exceeded every estimate of economists surveyed by Bloomberg News.

Manufacturers such as Deere & Co. are raising profit forecasts as business investment in new equipment accelerates and exports climb as the global economy recovers.

“Given where inventory ratios are right now, manufacturing has at least several more months of very rapid growth in front of it,” said Robert Stein, a senior economist at First Trust Portfolios LP. Businesses “are just going to see a lot of demand for the kind of stuff you put on shelves.”

Other reports said consumer spending rose less than forecast in January, as increasing food and fuel prices caused Americans to cut back on other goods and services, and fewer Americans signed contracts to buy previously owned houses.

The index of pending home resales fell 2.8 percent after a revised 3.2 percent decrease the prior month that was initially reported as a gain, according to a report today from the National Association of Realtors.

The Chicago group’s production gauge rose to 78.2 from January’s reading of 73.7. The gauge of new orders climbed to 75.9 from 75.7. The employment measure fell to 59.8 from 64.1 the prior month, Bloomberg said.

Factories boosted payrolls by 49,000 workers in January, the most since August 1998, according to U.S. Department of Labor data.