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Published: Friday, 12/3/2010

Factory, service reports mixed

WASHINGTON — In mixed economic news Friday, orders to U.S. factories fell in October by the largest amount in five months, but a separate report shows the service sector expanded for the 11th-straight month in November and at the fastest pace in six months.

Factory orders declined 0.9 percent in October, the Commerce Department said. It was the first setback since June and the biggest decline since a 1.8 percent fall in May.

The weakness was led by plunging demand for commercial and military aircraft. Excluding the transportation categories, orders were down a smaller 0.2 percent.

Manufacturing has been one of the standout performers in what has been a subpar economic recovery. Booming export sales have helped to offset weakness in domestic demand.

A separate report from the Institute for Supply Management, a private trade group, about the service sector follows a string of other indicators this week indicating the economy is steadily improving.

The report said that its service sector index, which covers 80 percent of the economy, rose to 55 last month from 54.3 in October. It was the highest reading since May. Any figure over 50 indicates growth.

“Economic activity is still moving along, but uncertainty and a lack of clarity over the economy and over regulatory issues continue to impede hiring,” said Jennifer Lee, an economist at BMO Capital Markets.

Still, the ISM's report on the service sector is consistent with annual economic growth of about 3 percent, economists said. That's not enough to rapidly reduce unemployment after such a steep recession.

The biggest glitch in the economic news was a Labor Department's disappointing jobs report that showed the expansion didn't boost hiring in November and the nation's unemployment rate rose to 9.8 percent last month from 9.6 percent.

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