New orders for U.S. manufactured goods climbed in October at their fastest rate in over a year, the government said on Friday, offering further evidence of a revival in the long-slumping factory sector.

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U.S. factory orders climbed 2.2 percent in October, the fifth increase in the last six months, the Commerce Department said.

The gain, which was close to the 2 percent rise expected on Wall Street, reflected a revised 3.4 percent surge in demand for expensive, long-lasting durable goods and a 0.7 percent increase in items expected to last less than three years.

Orders for transportation equipment were up a strong 5.5 percent in October, reflecting a big gain in civilian aircraft orders. Stripping out demand for transportation-related goods, factory orders were up a less robust, but still solid 1.6 percent.

The data added to numerous other signs the long-moribund U.S. factory sector is finding its feet.

The Institute of Supply Management said on Monday its November index of manufacturing activity rose to 62.8 in November, the highest level in almost 20 years.

But despite the new-found strength, U.S. manufacturers have yet to create jobs.

The Labor Department said earlier on Friday manufacturing payrolls shrank by 17,000 in November, the 40th consecutive month of layoffs.

Shipments of factory goods rose 0.7 percent in October, pushing the inventory-to-shipments ratio down to a record low 1.29. Economists say historically lean inventories will likely lead to further production gains as businesses try to restock their shelves.

Non-defense, non-aircraft capital goods orders, which economists use to gauge business spending plans, rose 1.8 percent in October, suggesting a third-quarter surge in business investment was not a flash in the pan.

The department said last week business investment climbed at a sharp 14 percent annual rate last quarter, suggesting a long capital-spending downturn that had pulled the economy into recession in 2001 has drawn for a close.

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