A gauge of export orders rose above 50 for the first time in six months, according to the ISM survey. That's a hopeful sign that overseas economies are improving, raising demand for U.S. goods.

A survey in China on Monday found manufacturing activity in that country expanded for the third straight month. That adds to evidence that its economy is improving after a slowdown last year.

Growth in the U.S. economy is being driven by other sectors, such as housing. A government report showed that construction firms spent more on home building in November.

Overall construction spending slipped 0.3 percent because of a sharp drop in federal government projects. Spending on commercial buildings, such as office buildings and shopping malls, also fell.

There have been some positive signs for factory output. In November, companies substantially increased their orders for a category of large equipment that reflects their investment plans. That followed a big increase in the same category in October.

The economy grew at a 3.1 percent annual rate in the July-September quarter, much better than the 1.3 percent pace in the April-June quarter. But economists expect growth slowed in the final three months of last year, partly because of the uncertainties surrounding the fiscal cliff, to below a 2 percent pace.

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