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NEW YORK, March 2 (Reuters) - U.S. factory activity contracted in February for the 13th consecutive month but at a slightly less severe rate than in January, according to an industry report released on Monday.
The Institute for Supply Management said its index of national factory activity rose to 35.8 in February from 35.6 in January.
A reading below 50 indicates contraction in the sector. Economists had expected a reading of 33.8, according to the median of their 74 forecasts in a Reuters poll, which ranged from 30.0 to 36.9.
"We have seen production deteriorating at rapid rate. I wouldn't read any positive news in today's report," said Anna Piretti, senior economist at BNP Paribas in New York.
"This is still a low reading, in recession levels. It's still painting a gloomy picture."
Still, on Wall Street, stocks pared their losses after the ISM report.
U.S. government bonds, which generally benefit from signs of economic weakness, gave up some of the day's earlier gains after the ISM report.
Norbert Ore, chairman of the ISM's business survey committee, said U.S. manufacturing will struggle for months to come and that there would have to be improvement in housing and the automobile sector before recovery can take hold.
Ore also told a teleconference of journalists that the lone positive sign in Monday's data was that the drop in the customer inventories index was a move in the right direction.
The index of customers' inventories fell to 51.0 in February from 55.5 in January.
Many economists say that among the many problems facing the U.S. economy in the current year-old recession is the fact that demand has fallen so quickly that it has left a glut of inventories that now need to be worked off.
(Additional Reporting by Richard Leong, Editing by Chizu Nomiyama)