WASHINGTON—American factories grew in December at the fastest pace in more than two years as manufacturing continued to weather the pandemic better than the battered services sector. The Institute for Supply Management reported Tuesday that its gauge of manufacturing activity rose to 60.7 percent last month, the highest reading since it stood at 60.8 in August 2018. The gauge was up 3.2 percentage points from a November level of 57.5. Any reading above 50 indicates expansion in the manufacturing sector. The U.S. economy collapsed from April through June but since that time manufacturing has posted solid gains, while the services sector, which includes restaurants, bars, and the travel industry, has been harder hit. General Motors reported Tuesday that sales jumped 5 percent in the final quarter of 2020, its best fourth-quarter performance in retail sales since 2007 with deliveries up 12 percent. Toyota, which has U.S. plants in Georgetown, Ky., …