Just when the optimists start crowing about an imminent recovery, more data come out.

The manufacturing sector of the economy has been in the dumps all year, but Thursday's data on

durable goods orders for October helped the

Dow Jones Industrial Average close with a triple-digit gain and bolstered hopes that a turnaround was just over the horizon. Friday's reports gave investors what skeptics would call a dose of reality.

The National Association of Purchasing Management said the

Chicago purchasing managers' index fell to 41.1 in November from 46.2 in October, marking the 14th straight month of declining activity.

"We're still faced with considerable hurdles in the near future, which is underscored by the dismal state of manufacturing," said Anthony Karydakis, an economist at Banc One Capital Markets.

The Chicago PMI was well below economists' forecasts. A reading below 50 signals contraction in the manufacturing sector, while a figure above that level indicates expansion. The employment component of the report fell to 37.2 in November from 42 in October.

The report came a day after the Census Bureau said durable goods orders jumped 12.8% in October. "Contrary to what the headline number said, the durable goods orders do not bode well for the economy," said David Orr, chief capital markets economist at First Union. Excluding transportation, durable goods orders rose only 3.4%, doing little to offset a 6.4% drop in September.

By Orr's calculation, nondefense capital goods orders fell 23.7%, excluding aircraft orders. The markets, he said, got on the bandwagon for a recovery too early.

Also Friday, the decline in third-quarter

gross domestic product was revised downward, the Commerce Department said. GDP shrank 1.1% in the quarter, in line with revised forecasts, but a sharper drop than the first look at the number showed, which indicated that the economy contracted by 0.4%.

The revision reflected deeper cuts in inventories, however. They fell at a record rate of $60.1 billion in the third quarter. That's good news, economists say. "It sets the stage for an eventual recovery," said Karydakis. The revision also was the result of a wider-than-expected trade deficit. Business investment spending fell 9.3%, up from an advanced forecast of an 11.9% decline.

Both reports Friday raised hopes for more rate cuts. "I think today's reports solidify the beliefs the Fed is going to ease on Dec. 11," said Karydakis. "And it opens the door to additional cuts beyond that date."