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Small gains in service, manufacturing sectors

WASHINGTON - 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. Yet the gains aren't likely to be enough to reduce high unemployment anytime soon.

The service sector, which employs about 80 percent of Americans, grew faster in October than in September, a trade group said. It also posted its 10th straight month of expansion.

A separate report showed that orders to U.S. factories rose broadly in September. Business spending on big-ticket goods such as airplanes and heavy machines produced most of the demand for factory orders, the Commerce Department said. But consumer spending also rose 1 percent, after running flat in August.

Economists have worried that consumers won't spend enough to keep factories moving as business spending subsides. The factory report might ease those fears.

"The economy is picking up steam here," said John Silvia, chief economist at Wells Fargo. "It's not going to be a boom, but it's not as pessimistic as many people were expecting."

The Institute for Supply Management, a trade group of purchasing executives, said its service sector index rose to 54.3 in October, up from 53.2 in September. A figure above 50 indicates the sector is expanding.

The index reached 55.4 in the spring, its peak after 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.

Economists said October's figure is consistent with modest economic growth of about 2.5 percent. - AP

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