WASHINGTON (AP) -- Orders to U.S. factories fell for a fourth straight month in November, with demand in a key category that signals business investment plans down for a third month. Meanwhile, U.S. services firms expanded at a solid but much slower pace in December compared with the previous month, a sign growth may have cooled at the end of last year.<br />
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The Commerce Department said Tuesday factory orders dropped 0.7 percent in November after a similar 0.7 percent fall in October. The November weakness came from decreases in demand for primary metals, industrial machinery and military aircraft.<br />
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A closely watched category that serves as a proxy for business investment spending dropped 0.5 percent in November, marking the longest stretch of weakness in this category since 2012.<br />
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Economists, however, remain optimistic that the drop in orders is a temporary soft patch and a stronger economy with increased consumer spending will trigger a rebound in demand in 2015.<br />
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Demand for durable goods, items expected to last at least three years, fell 0.9 percent in November, the third drop in the past four months. Demand for nondurable goods such as petroleum, chemicals and paper declined 0.5 percent.<br />
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The overall weakness was led by a big drop of 11.1 percent in orders for military equipment, a volatile category that had shown a big 20.2 percent surge in October.<br />
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Demand for transportation equipment fell 1.3 percent in November, though orders for commercial aircraft and autos both rose. However, the overall transportation category was held back by a 7.4 percent fall in demand for military aircraft.<br />
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Total factory orders fell to a seasonally adjusted $492.7 billion in November. Orders for the first 11 months of 2014 were 3.4 percent higher than the same period in 2013.<br />
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SERVICE FIRMS<br />
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U.S. services firms expanded at a solid but much slower pace in December compared with the previous month, a sign growth may have cooled at the end of last year.<br />
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The Institute for Supply Management said Tuesday that its services index fell to 56.2 last month, down from 59.3 in November. Yet the drop comes from a very high level: November's reading was near an eight-year high of 59.6 reached in August. Any reading over 50 indicates expansion.<br />
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The decline echoes a similar drop in the ISM's manufacturing index, released last Friday. Both indexes fell from strong readings in November, but are still showing steady levels of expansion. Hiring picked up last year and gas prices have fallen, leaving more Americans with money to spend. That benefits retailers, hotels, restaurants and other service providers.<br />
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Paul Dales, senior U.S. economist, said the two ISM surveys are consistent with an economy growing at a 3 percent annual rate. That's solid, though below the breakneck 4.8 percent pace in the April-September period.<br />
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"Don't interpret this survey as a sign that the outlook has weakened," Dales said in a note to clients. "On the contrary, the further fall in oil prices has actually made things even better."<br />
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A measure of sales fell sharply and a gauge of orders also declined, evidence that business may slow a bit this month. But growth in hiring was just slightly below November's reading, suggesting that job gains last month were still healthy.<br />
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That's a good sign ahead of the government's jobs report for December, which will be released Friday.<br />
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The ISM is a trade group of purchasing managers. Its survey of services firms covers businesses that employ 90 percent of the American workforce, including retail, construction, health care and financial services companies.<br />
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