US manufacturing grew in November at its quickest pace in five months, with a rise in domestic demand suggesting factories could provide a boost to economic growth in the fourth quarter.

Other data today showed a drop in new claims for jobless benefits, although they remained elevated due to superstorm Sandy, and only a marginal improvement in consumer sentiment.

Financial information firm Markit said its US "flash," or preliminary, manufacturing Purchasing Managers Index rose to 52.4 from a three-year low of 51.0 in October. A reading above 50 indicates expansion.

Output in the factory sector and domestic new orders also grew at their fastest pace since June, while the pace of hiring in the factory sector was the swiftest in four months.

Some respondents said efforts to rebuild after Sandy may have accounted for some of the increased demand.

The data gives a positive signal for economic growth in the last three months of the year, although Sandy continues to make it more difficult to read the underlying health of the economy.

"Stripping out the short-term boost from Sandy, however, and output is probably flat," said Paul Dales, an economist with Capital Economics in London.

"That's unlikely to change much when the global economy is set to remain weak," he said.

Separately, the Labour Department said initial claims for state unemployment benefits dropped 41,000 to a seasonally adjusted 410,000.

Despite the drop, the level of claims remained elevated due to Sandy, a sign of the substantial disruption to the labour market from the storm.

That will likely prove temporary, although economists thought today’s data nevertheless pointed to a struggling jobs market.

"There appears to be a noticeable deceleration of growth in the fourth quarter," said Peter Hooper, an economist at Deutsche Bank in New York. "It would not be surprising if some of the new jobless claims are due to underlying weakness," he said.

US financial markets showed little reaction to the data as investors focused on developments in Europe and trading slowed ahead of the Thanksgiving holiday tomorrow.

US stocks rose, while Treasury debt prices were down modestly.

An analyst from the Labour Department said several states were still reporting an increase in claims due to Sandy, a mammoth storm that slammed into the East Coast on 29 October.

The storm left millions of homes and businesses without electricity, shut down public transportation and led many factories in the Mid-Atlantic and Northeast to curtail production. Retail sales fell as Sandy slammed the brakes on automobile purchases last month.

The data covers the same week when the department collects data for its estimate on hiring during the month, and gives some reason to expect softness in that report due on 7 December, although not all analysts expect a significant impact. Nonfarm payrolls grew 171,000 in October.

"We are expecting things to be in the neighborhood of what we have seen, maybe with a pullback in light of the hurricane," said Bricklin Dwyer, an economist at BNP Paribas in New York.