(Reuters) - The pace of growth in the U.S. manufacturing sector picked up in November at its strongest level since June, and new orders rose, according to an industry report released on Thursday.

The Institute for Supply Management (ISM) said its index of national factory activity rose to 52.7 from 50.8 the month before. The reading topped expectations of 51.5, according to a Reuters poll of economists.

A reading above 50 indicates expansion in the manufacturing sector, while a number below 50 means contraction. New orders gained to 56.7, its highest level since April, from 52.4. But the employment gauge lost some steam, falling to 51.8 from 53.5. (Reporting by Leah Schnurr; Editing by Padraic Cassidy)

(Reuters) - U.S. construction spending increased more than expected in October as investment in private building projects touched its highest level in nearly two years, adding to hopes of sturdy fourth-quarter economic growth.

Construction spending rose 0.8 percent to an annual rate of $798.53 billion, the Commerce Department said on Thursday, after gaining 0.2 percent in September.

Economists polled by Reuters had expected construction spending to rise 0.3 percent in October. Overall construction spending fell 0.4 percent from a year ago. (Reporting by Lucia Mutikani, Editing by Chizu Nomiyama)

30-year fixed-rate mortgage (FRM) averaged 4.00 percent with an average 0.7 point for the week ending December 1, 2011, up from last week when it averaged 3.98 percent. Last year at this time, the 30-year FRM averaged 4.46 percent.

15-year FRM this week averaged 3.30 percent with an average 0.8 point, the same from last week when it averaged 3.30 percent. A year ago at this time, the 15-year FRM averaged 3.81 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.90 percent this week, with an average 0.6 point, down from last week when it averaged 2.91 percent. A year ago, the 5-year ARM averaged 3.49 percent.

1-year Treasury-indexed ARM averaged 2.78 percent this week with an average 0.6 point, down from last week when it averaged 2.79 percent. At this time last year, the 1-year ARM averaged 3.25 percent.

The October Mortgage Monitor report released by Lender Processing Services, Inc. (NYSE: LPS) shows mortgage delinquencies continue their decline, now nearly 30 percent off their January 2010 peak. Meanwhile, foreclosure inventories are on the rise, reaching an all-time high at the end of October of 4.29 percent of all active mortgages. The average days delinquent for loans in foreclosure extended as well, setting a new record of 631 days since last payment, while the average days delinquent for loans 90 or more days past due but not yet in foreclosure decreased for the second consecutive month.

Total U.S. loan delinquency rate: 7.93%
Month-over-month change in delinquency rate: -2.0%
Total U.S. foreclosure pre-sale inventory rate: 4.29%
Month-over-month change in foreclosure pre-sale inventory rate: 2.5%
States with highest percentage of non-current* loans: FL, MS, NV, NJ, IL
States with the lowest percentage of non-current* loans: ND, AK, SD, WY, MT
*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.
Notes:
(1) Totals are extrapolated based on LPS Applied Analytics' loan-level database of mortgage assets.
(2) All whole numbers are rounded to the nearest thousand.

(Reuters) - New U.S. claims for unemployment benefits rose unexpectedly last week, popping above 400,000 for the first time in just over a month and reinforcing the view that the battered labor market was healing only slowly.

Initial claims for state unemployment benefits climbed to a seasonally adjusted 402,000 from an upwardly revised 396,000 in the prior week, the Labor Department said on Thursday.

Economists polled by Reuters had forecast claims at 390,000. The U.S. economy has gathered steam in the second half of the year, expanding at a 2 percent annual rate in the third quarter. It could accelerate in the fourth quarter. That could help the country avoid a new recession, which is expected in the euro zone. But economists still see a risk of a U.S. recession next year, especially if lawmakers allow extended unemployment benefits and a payroll tax cut to expire at the end of 2011.

A Labor Department official said there was nothing unusual in the data, although government statisticians had to estimate claims data for Alaska and Washington DC. The four-week moving average of claims, a closely followed measure of labor market trends, increased 500 to 395,750. Initial claims below the 400,000 mark are normally seen as pointing to some healing in the jobs market.

The number of people still receiving benefits under regular state programs after an initial week of aid rose 35,000 to 3.74 million in the week that ended Nov. 19. Economists had forecast so-called continuing claims falling to 3.65 million from a previously reported 3.69 million. A total of 7.01 million people claimed unemployment benefits under all programs during the week ending Nov 12, up 276,832 from the prior week. (Reporting by Jason Lange, Editing by Andrea Ricci)

Nothing much transpired overnight, at least relative to the glut of data and headlines out of Europe (and sometimes Asia) to which we've grown accustomed. Bond markets' biggest detractor appears to be much-stronger-than-expected French and Spanish auctions. We could be seeing a number of other things here ranging from "discounting economic data" for the last two days of the week" or even a more tactical trade (short term, "trader's paradise kinda stuff) on the expectation that the boiling-point reached in the EU will soon result in some sort of temporary pressure relief. We should also probably not overlook the fact that it's now 12/1/11, and if we're always on about "month-end-buying" being a supportive event for bond markets, then perhaps we're also experiencing a bit of unwind to that phenomenon.

Any way you slice it, bond markets are weak and getting weaker before the 830am data. 10yr yields are up 6 bps to 2.133 and Fannie 3.5's are down 12 ticks to 101-18. Jobless Claims is the sole release at 830am and then we're waiting until 10am for the Construction Spending and ISM Manufacturing.