US factory orders up but service sector growth slows

 
City A.M. Reporter
US service sector activity growth eased in October to its slowest level in three months, but new orders for good from factories unexpectedly rose, suggesting economic growth remains patchy.

In other U.S. data reported on Thursday, new claims for unemployment benefits fell below 400,000 last week for the first time in five weeks, suggesting a modest improvement in the labor market, but chain store retailers reported disappointing October sales.

"Based on the ISM manufacturing and services data, the economy is still crawling at a pace that is so anemic," said Bernard Baumohl, chief global economist, at The Economic Outlook Group LLC, in Princeton, New Jersey.

"For most Americans, it makes no difference whether the economy is stuck at this pace or we are in recession. This is very lackluster growth that will not lead to a pick-up in hiring.

The U.S. Institute for Supply Management said its services index eased to 52.9 last month from 53.0 the month before. The reading fell shy of economists' forecasts for 53.5, according to a Reuters survey, and was the lowest level since July.

A reading above 50 indicates expansion in the sector. A gauge of new orders fell to 52.4 from 56.5, but the employment component improved to its highest level since June at 53.3 from 48.7.

New orders for U.S. factory goods unexpectedly rose in September and capital spending plans by businesses surged, according to a government report on Thursday that showed underlying strength in manufacturing.

The Commerce Department said orders for manufactured goods increased 0.3 percent after a revised 0.1 percent gain in August, previously reported as a 0.2 percent fall. Economists had expected orders to slip 0.1 percent.