A worker builds an engine for the Boeing 737-900 at their assembly operations in Renton, Washington, October 18, 2012. REUTERS/Andy Clark

WASHINGTON (Reuters) - New orders for U.S. factory goods fell for a third straight month in October, pointing to a slowdown in manufacturing activity.

The Commerce Department said on Friday new orders for manufactured goods declined 0.7 percent after a revised 0.5 percent drop in September.

Economists polled by Reuters had forecast new orders received by factories would be unchanged after a previously reported 0.6 percent fall in September.

There are conflicting signals on the manufacturing sector, with the so-called hard data suggesting a cooling in activity, while sentiment surveys point to a building of momentum.

Factory orders excluding the volatile transportation category dropped 1.4 percent in October after being flat for two straight months.

Unfilled orders at factories increased 0.4 percent in October. Order backlogs have increased in 18 of the last 19 months. Inventories edged up 0.1 percent, while shipments fell 0.8 percent.

That left the inventories-to-shipments ratio at 1.31, up from 1.30 in September.

The Commerce Department also said orders for durable goods, which are manufactured products expected to last three years and more, rose 0.3 percent instead of the 0.4 percent gain reported last month.

Orders for non-defense capital goods excluding aircraft - seen as a measure of business confidence and spending plans - fell 1.6 percent instead of the 1.3 percent decline reported last month.





(Reporting by Lucia Mutikani; Editing by Paul Simao)