NEW YORK (Reuters) - The U.S. manufacturing sector grew in October for the third consecutive month and at a faster rate than expected, according to an industry report released on Monday.

The Institute for Supply Management said its index of national factory activity rose to 55.7 in October from 52.6 in September. The median forecast of 74 economists surveyed by Reuters was for a reading of 53.

The October reading was the highest since 56.0 in April 2006.

A reading above 50 indicates expansion in the sector, while a number below that means contraction.

The ISM report also said its employment index for the manufacturing industry jumped to 53.1 in October, its strongest showing since April 2006, from 46.2 a month ago.

The employment index has not been above the 50 mark since July 2008, when it was at 51.

The unexpectedly strong data helped the U.S. stock market make further gains, while U.S. Treasury bonds, seen as a safe-haven investment in times of economic uncertainty, lost ground.

(Reporting by Chris Reese; Editing by Theodore d'Afflisio)