RBC Financial Group economists say that the mixed nature of the today’s data releases highlights the fact that the U.S. economy is in a transition phase between recession and recovery.

This phase is usually characterized by increased volatility, RBC says. “On the positive side, December factory orders rose 1.2%, adding to the chorus of data suggesting that the manufacturing recession has finally reached bottom. However, the good news in the report was tempered by the downward revision to November orders from a 3.3% decline to a 4.3% decline. Sales are running well ahead of production and with production expected to do some of the catching up in the months ahead, an upturn in the jobs market should soon follow.”

On the negative side, the Institute for Supply Management non-manufacturing index slipped to 49.6 from a downwardly revised level of 50.1 in December. A level above 50 indicates that the service sector is expanding. “This report suggests that while the service sector is not taking away from growth, it remains moribund. Look for the impetus to growth in the recovery phase to come for the manufacturing sector followed by a broader up-tick in the services economy,” RBC says.