WASHINGTON (Reuters] – U.S. orders increased by more than expected during October, and business spending on equipment seemed to recover after falling in the third quarter.

According to the Commerce Department, factory orders rose 1.0% in October according to Friday’s report. The Commerce Department revised September data to reflect orders increasing 0.5% rather than 0.2%, as reported previously. Reuters economists had predicted factory orders increasing 0.5%, according to Reuters.

On a year-over-year basis, orders rose 17.1%.

Manufacturing is 12% of GDP. Despite the shift to services, demand for goods continues to drive manufacturing. While businesses are rebuilding inventories due to the COVID-19 epidemic, it is still difficult for them to find labor and other raw materials.

A Wednesday survey by the Institute for Supply Management revealed that manufacturing activity increased in November. It also noted “some indicators of slight labor supply and delivery improvement.”

After a 1.0% increase in September, shipments increased 2.0%. The October inventory at factories grew 0.8%. After an increase of 0.7% the previous month, unfilled orders increased 0.3%.

Commerce Department reported also that non-defense capital goods orders, which exclude aircraft, rose 0.7% to 0.6%, as opposed to 0.6% last month.

The 0.4% increase in core capital goods shipped, which is what’s used to determine business equipment expenditure in the gross domestic products report, was due to an increase of 0.4%. They had previously been reported as increasing 0.3%.

It suggests an eventual rebound in business equipment spending, after it contracted in its third quarter following four consecutive quarters of double-digit economic growth. But inflation could cut into these gains.