Economic reports show improvements for service sector, factory orders

New orders for manufactured goods
By Christopher S. Rugaber
Wednesday, November 3, 2010; 8:36 PM

The economy is picking up a bit from its late-summer doldrums, according to two reports Wednesday, with both the service and manufacturing sectors showing better health.

The Institute for Supply Management said its service-sector index rose to 54.3 in October, up from 53.2 in September. A figure above 50 indicates that the sector is expanding. Economists said October's figure is consistent with modest economic growth of about 2.5 percent.

The index reached 55.4 in the spring, its peak since the recession ended in June 2009, before falling to 51.4 in August. It plummeted to 37.2 in November 2008, its low point during the recession. The index covers retailers, health care, financial services, hotels and restaurants, among other sectors.

A separate report Wednesday showed that orders to U.S. factories rose broadly in September. The Commerce Department said factory orders rose by 2.1 percent in September, the steepest increase since January. Orders were flat in August.

Business spending on big-ticket goods such as airplanes and heavy machines produced most of the demand, but consumer spending also rose by 1.0 percent after running flat in August. Excluding the volatile transportation sector, orders rose 0.4 percent, after gaining 1.3 percent in August.

Economists have worried that recession-weary consumers will not spend enough to keep factories moving as business spending subsides. Wednesday's report included some rare hints that the consumer economy may be improving.

Orders for household appliances were up by 3.9 percent after falling by 4.9 percent in August. Demand for furniture grew by 1.1 percent after gaining 10 percent in August.

- Associated Press

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