The service sector expanded for the 11th straight month in November and at the fastest pace in six months.

Friday's report from the Institute for Supply Management, a private trade group, follows a string of other indicators this week indicating the economy is steadily improving. But the Labor Department issued a disappointing jobs report Friday that showed the expansion didn't boost hiring in November. The unemployment rate rose to 9.8 percent last month, as job creation slowed.

The ISM said that its service sector index, which covers 80 percent of the economy, rose to 55 last month from 54.3 in October. It was the highest reading since May. Any figure over 50 indicates growth.

"Economic activity is still moving along, but uncertainty and a lack of clarity over the economy and over regulatory issues continue to impede hiring," said Jennifer Lee, an economist at BMO Capital Markets.

Some economists were mildly encouraged by the ISM's index of new orders, which rose by one point to 57.7, and its employment index, which moved to a three-year high of 52.7.

Those are more forward-looking indicators than the employment report, said Brian Levitt, an economist at OppenheimerFunds. They signal that hiring and growth will likely improve in the coming months.

Still, the ISM's report on the service sector is consistent with annual economic growth of about 3 percent, economists said. That's weak for a recovery after such a steep recession, and not enough to rapidly reduce unemployment.

U.S. short-term interest rate futures traders boosted bets the Federal Reserve will wait until mid-2012 before raising rates, after a government report showed the U.S. jobless rate unexpectedly rose in November.

Friday's report showed the unemployment rate rose to 9.8 percent. Economists had expected a rate of 9.6 percent.

Futures traders now are not fully pricing in an increase in the target rate for overnight lending between banks until May 2012, trading in federal funds futures at CME Group Inc's Chicago Board of Trade shows.

The Fed, which has kept short-term interest rates near zero for the past two years, last month embarked on a new round of Treasury buying to push borrowing costs down further in order to boost the economy and jobs.

Encouraged by recent stronger economic data, traders had been speculating the Fed might curtail its $600 billion Treasury debt purchase program, known as quantitative easing. Before the report they had been pricing in a better-than-even chance of a rate rise by December, 2011.

They backed off those bets after the jobs report, reflecting the view that the Fed may need to keep rates lower for longer to nurture what is still a fragile recovery.

"A softer-than-expected jobs number probably makes people a little more comfortable with the idea that the Fed will steadily progress with its planned quantitative easing," said Nick Bennenbroek, a currency strategies with Wells Fargo in New York.

SLATER & Gordon has filed a follow-up case in its long-running shareholder class action against the Centro property group.

The latest class action is limited to a subset of investors who acquired Centro shares after PricewaterhouseCoopers, the company's former auditor, began working for the property group in the latter part of 2007.

The case filed yesterday was necessitated by a decision handed down last month by Federal Court judge Donnell Ryan, who ruled that every potential claimant in a class action must have a claim against every defendant in the case.

Advertisement: Story continues below Slater & Gordon and Maurice Blackburn are running parallel class actions on behalf of Centro investors in the Federal Court.

The cases are set down for a trial before Justice John Middleton, beginning on August 22 next year.

Justice Ryan was following a decision of 10 years ago when the Full Court was considering the position of plaintiffs in a class action brought against tobacco products manufacturer Philip Morris.

Although other Federal Court judges have challenged whether the all-on-all approach is correct, Justice Ryan's decision meant the entire list of Slater & Gordon's clients who are suing the Centro companies couldn't also sue PricewaterhouseCoopers.

That is because some of the Slater & Gordon clients bought their shares before PricewaterhouseCoopers became involved with Centro. Slater & Gordon has also signalled to the court that it may seek leave to amend its original statement of claim against the Centro companies so that it traverses a shorter period of alleged wrongdoing.

The current case covers the period from April 5, 2007, to February 28, 2008, but a future amendment is likely to bring the starting date to mid-July 2007.

Slater & Gordon's class action is being funded by Comprehensive Legal Funding; Maurice Blackburn's case is funded by IMF Ltd.

State attorneys sued two companies yesterday in a new round of litigation to recover money for what it says was a massive fraud scheme by pharmaceutical companies and others that cost the Medicaid program tens of millions of dollars.

The Circuit Court lawsuit was filed against McKesson Corp., wholesaler of the pharmaceutical prescription drugs, and First DataBank Inc., which compiles and publishes the drug prices.

The suit follows earlier litigation against 40 pharmaceutical giants and other drug manufacturing companies. The case ended last month with the state recovering more than $82 million from out-of-court settlements.

The state's share of the settlement is estimated to be between $30 million and $40 million.

Yesterday's suit alleges that the wholesaler and the drug-price company helped inflate the price of brand-name drugs that resulted in the state overpaying Medicaid providers.

The lawsuit did not disclose how much money it is seeking. Attorney General Mark Bennett said they believe it will be "substantial."

Like the first lawsuit, yesterday's action seeks not only money for the amount of alleged Medicaid overpayments, but also punitive damages and civil penalties and fines.

The state pointed out that cost of prescription drugs in the Medicaid program increased to $117 million in 2004 from $45 million in 1999.

McKesson officials could not be reached for comment. Denise Apcar, First DataBank marketing communications manager, said to her knowledge the firm had not been served with the suit and would not comment.

The state's lawsuit yesterday follows litigation involving similar allegations against McKesson and First DataBank on the mainland. McKesson agreed to pay $350 million in a class-action lawsuit in Massachusetts two years ago and $9 million to Connecticut's Medicaid program earlier this year.

The fate of the largest job bias lawsuit in the nation's history — a claim that Wal-Mart Stores Inc. shortchanged women in pay and promotions for many years — hinges on whether the Supreme Court will let the class-action case go to trial.

The court is likely to announce as soon as Monday whether it will hear the retail giant's appeal asserting that a single lawsuit cannot speak for more than 1.5 million employees.

Business lawyers and civil rights advocates are closely following the Wal-Mart case for its implications for class-action litigation.
"This may sound like just a technical, procedural issue, but because of the economics of it, class-action certification is often the most important issue to be decided," said Washington lawyer Roy T. Englert Jr.

If the high court permits the Wal-Mart case to proceed as a class action, it will put enormous pressure on the retailer to settle, he said. The plaintiffs have not specified the damages they would seek, but given the size of the class, it could mount into billions of dollars.

The U.S. Chamber of Commerce and several large corporations have joined with Wal-Mart, the nation's largest employer, in urging the high court to hear the appeal and to restrict the use of class-action claims.

They argue that it is unfair to permit plaintiffs' lawyers to lump together many thousands of employees from stores spread across the country and to rely on statistics to prove illegal discrimination.