Dec 5 (Reuters) - The service sector continued to grow in November as new orders rose, a private survey said on Thursday, while factory orders were up in October for the second straight month.

ISM:

STORY: TABLE:

FACTORY ORDERS:

STORY: TABLE

KEY POINTS: * New orders received by U.S. factories unexpectedly rose in October as demand for motor vehicles and a range of other goods offset a slump in defense and civilian aircraft orders, a hopeful sign for the manufacturing sector. * The Commerce Department said orders for factory goods increased 0.8 percent after a revised 4.5 percent rise in September. It was the second straight month of gains and beat economists' expectations for a flat reading. * The Institute for Supply Management said its services index rose to 54.7 last month from 54.2 the month before. The reading topped economists' forecasts for growth of 53.5, according to a Reuters survey.

COMMENTS: ANTHONY NIEVES, CHAIR, ISM NON-MANUFACTURING BUSINESS SURVEY COMMITTEE, THOUSAND OAKS, CALIFORNIA:

'Our respondents' comments reflect there are mixed feelings, a feeling that they are on the right track concerning growth but also uncertainty about what's in store down the road. There is this uncertainty, but we keep seeing growth month after month and this trend has been in place for 40 months.

JACK DE GAN, CHIEF INVESTMENT OFFICER, HARBOR ADVISORY CORP, PORTSMOUTH, NEW HAMPSHIRE:

'The numbers were a little bit better than expected but that is not what is driving the market unfortunately, it is the fiscal cliff and Washington.

'The economy is looking stronger than the stock market would indicate. The market is actually holding up pretty well in light of the gridlock we're seeing out of Washington.

'The underlying economy is stronger than most believe and therefore if we do get some sort of resolution to the cliff, anything short of disastrous, we'll end (the year) with a higher market.'

DAVID KEEBLE, GLOBAL HEAD OF INTEREST RATE STRATEGY, CREDIT AGRICOLE, NEW YORK:

'The new orders on the ISM, even after the storm, it does look like perhaps that prompted some new orders and that does portend well for the future. But at the same time the employment component did drop, so it looks that factor is still tied up in the storm.

'It doesn't look bad when you drill into the details. I'm moderately optimistic by what they say.

'Factory orders, overall, are not bad numbers. I am surprised the market has been so tepid in its reaction. But then we do have bigger factors swirling around such as the fiscal cliff, Fed meeting next week, and a widening of Spanish yields versus Germany this morning.'

JOEL NAROFF, PRESIDENT, NAROFF ECONOMIC ADVISORS, HOLLAND, PENNSYLVANIA:

'Consumers seem to be very happy about things in November. That's showed up in the non-manufacturing number. There were also strong vehicle numbers. The Black Friday sales were pretty good. Things on the consumer side seemed to be picking up steam after the election.

'Sandy was expected to slow activities in New Jersey, Pennsylvania and all the way up to New England so this report is heartening. Consumer spending and with any of November numbers, you have to put the Sandy modifier on them. Once the Sandy effects are over, things might pick up.'

DAVID SLOAN, ECONOMIST, 4CAST LTD, NEW YORK:

'Our first reaction is that (ISM services) is pretty positive. The new orders and the business activity indexes were up quite healthily. The employment index dipped a lot but that may just be a hurricane Sandy short-term effect. The rise in new orders and business activity augers well for business activity going forward.

'In the factory orders report, durables were revised up a little and non-durables were also positive so both of the numbers were stronger than expected. The factory orders is not a major number but it does add to the view that manufacturing is gaining a bit of underlying momentum after a recent subdued spell.'

JOSEPH TREVISANI, CHIEF MARKET STRATEGIST, WORLDWIDE MARKETS, WOODCLIFF LAKE, NEW JERSEY

'The much larger service side of the U.S. economy remains relatively healthy. It has so far avoided the contraction in manufacturing, but worse is probably coming in the first quarter of next year as the economy continues to slow.'

MARKET REACTION:

STOCKS: U.S. stock indexes were flat BONDS: U.S. bond prices were little changed FOREX: The dollar added to gains against the yen

(Americas Economics and Markets Desk; +1-646 223-6300)

Keywords: USA ECONOMY/INSTANT

COPYRIGHT

Copyright Thomson Reuters 2012. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.