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Service Industries, Factory Orders Rise

An index of nonfactory businesses climbs. An employment survey shows the highest gain in three years.

November 06, 2003|From Bloomberg News

U.S. service industries expanded at a faster rate last month and September factory orders rose for a fourth time in five months amid signs that the economy is adding jobs at a quicker pace, according to reports Wednesday.

The Institute for Supply Management's index of nonfactory businesses climbed to 64.7, the second-highest level on record, from 63.3 in September. Readings higher than 50 indicate growth. Orders at U.S. factories rose 0.5% in September, the Commerce Department said.

A gauge of employment in the service index rose to the highest since November 2000, prompting some economists to increase their estimate for October's employment report to a gain. Treasury Secretary John W. Snow said last month that he would stake his reputation on job growth by Christmas and noted private forecasts that job gains might eventually reach 200,000 a month.

The economy is forecast to add 65,000 jobs in Friday's Labor Department report. Unemployment may have held at 6.1% for a third straight month, a Bloomberg survey of economists found.

The Institute for Supply Management's employment index rose to 52.9 in October from 49.1 in September. New orders for nonmanufacturing companies rose to 64.4 from 59.9. Order backlogs eased to 54 from 57. The group's index of prices paid, a measure of costs for purchased materials and services, fell to 58.7 from 60.1 in September. The inventory index rose to 49 last month from 47.5 the month before.

September's 0.5% increase in factory orders brought the level to $331.1 billion, the Commerce Department said. August orders fell a revised 0.3%, less than half the decline estimated last month. Excluding transportation equipment, orders rose 0.6% in September.

The manufacturing inventory-to-sales ratio fell to a record-low 1.30 months in September. Factory inventories dropped 0.4% after declining 0.3% in August.

Durable goods orders, which account for more than half the report, rose 1.1% in September. Bookings for nondurable goods, which include industrial chemicals, drugs and textiles, fell 0.2%.

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