Factory Orders Up 1.2 Percent
17:21EST
01/05/00
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WASHINGTON (AP) -- Factory orders rose 1.2 percent in November as strong demand for electronic products gave American manufacturers their first increase in orders since August.
The November advance followed no gain in October and a 1 percent decline in September, the Commerce Department said Wednesday. Orders had risen by 1.3 percent in August.
The rebound in manufacturing was just one more piece of evidence that the U.S. economy is showing little evidence of a slowdown, despite three interest rate increases last year by the Federal Reserve. Richard Yamarone, an economist at Argus Research in New York, said there was little doubt the Fed will raise rates again at their first meeting this year, a two-day session on Feb. 1-2, with more increases to follow.
"If we get continued economic strength and tight labor markets, we are looking for another three Fed rate hikes,' Yamarone said.
Stocks, led by technology companies, had plunged Tuesday as investors grew increasingly worried about the possibility of future Fed actions. The Dow Jones industrial average, which suffered its fourth-worst point drop of all time Tuesday, losing 360 points, recovered somewhat Wednesday, rising by 125 points to close at 11,123.
President Clinton announced Tuesday that he was nominating Alan Greenspan for a fourth, four-year term as Fed chairman, something investors saw as removing any uncertainty over the Fed's freedom to increase interest rates if they saw the need to move.
For November, manufacturing orders increased by $4.5 billion to a seasonally adjusted $365.2 billion.
The rebound in demand was led by a $3 billion increase in orders for electrical equipment, which rose 8.4 percent over the October level, the biggest gain for this category since July 1998. Demand for electronic components, a category that includes computer chips, shot up by 32.9 percent.
Orders for primary metals, including steel, rose 1.8 percent to $15.7 billion. Compared with a year earlier, orders for primary metals were up 8 percent, a hopeful sign for an industry battered by a flood of cheaper imports since the Asian crisis started in 1997.
The U.S. steel industry succeeded in getting the government to impose stiff anti-dumping tariffs on various steel products in an effort to stem the import tide and combat layoffs that had cost thousands of steelworker jobs.
Orders for cars, planes and other transportation equipment actually fell by 3.5 percent in November to $45.1 billion, reflecting in large part a drop in demand for aircraft and parts.
Excluding the volatile transportation category, overall factory orders would have been up by 1.9 percent in November, the biggest advance since a 2.6 percent rise in July.
Stan Shipley, an economist with Merrill Lynch in New York, said that now that South Korea, Thailand and other Asian crisis countries were mounting solid economic rebounds, demand for U.S. manufactured goods was beginning to rise.
"Almost every indicator of industrial activity suggests that the factory sector should have healthy gains in the months ahead,' Shipley said.
Orders for durable goods, items expected to last three or more years, rose by 0.9 percent in November. This represented a downward revision from an advance report two weeks ago that estimated durable-goods orders had risen 1.2 percent in November.
Orders for nondurable goods were up 1.6 percent in November following a 1.1 percent October increase. |
