The US manufacturing sector picked up pace in June but growth remained modest, the Institute for Supply Management reported Wednesday.

Respondents to the ISM purchasing managers survey said the auto industry continued to be strong on US consumer spending, but the downturn in the oil industry, slow economic growth outside the country, and the avian flu's impact on food processors, were holding back manufacturing overall.

The ISM purchasing managers index rose to 53.5 from 52.8 in May. A reading above 50 on the PMI indicates expansion. The June level was still below the 12 month average of 54.7.

New orders accelerated slightly and hiring in the sector jumped, while production overall slowed and prices decreased in June, according to the survey.

"Comments from the panel indicate mostly stable to improving business conditions, with the notable exception relating to the oil and gas markets," the ISM said.

"Also noted is the negative effect on egg prices and availability due to the avian flu outbreak."