Stocks climbed on the positive report and the Dow Jones industrial was up 161 points or 1.5 percent through morning trading.
Hiring rose to 50.2 from 48.2 last month when the sector shed jobs while new orders increased to 54.9 from 52.4, meeting economists expectations that orders tend to increase at the end of the quarter.
Still, unemployment is a drag on the economic recovery and may prompt the Federal Reserve to provide more stimulus in the form of purchases of government and mortgage-backed bonds if the recovery doesn't pick up pace.
Federal Reserve Chairman Ben Bernanke said late Monday that the economy could be helped by another round of asset purchases. The central bank could announce new measures at its next meeting Nov. 2-3.
The next monthly employment report is due out Friday from the Labor Department.