The seeds of economic recovery trumpets continue to play to deaf ears and da beat goes on:
U.S. Durable Goods Orders Increased 2.6% in January
from Bloomberg
By Carlos Torres
Washington, Feb. 27 (Bloomberg) -- U.S. new orders for durable goods rose in January, the third increase in the last four months and a sign factories are starting to recover from a 1 1/2-year slump.
The 2.6 percent increase in orders to $179.1 billion, reflecting more demand for autos, aircraft and computers, followed a revised 0.9 percent rise the previous month, the Commerce Department said. Orders for durable goods excluding transportation equipment rose 1.3 percent in January after rising a revised 0.4 percent the prior month.
A rebound in demand that started a month after the September terrorist attacks suggests factories are starting to emerge from a contraction that began in August 2000. Boeing Co. had a surge in orders last month and General Motors Corp. is boosting production this year because its inventory of cars isn't enough to meet demand.
Manufacturing ``has bottomed out and is gearing up to grow,'' said Tim McGee, chief economist at UFJ Bank Ltd. in New York.
The increase in manufacturing adds to other evidence that the economy is recovering from a recession that began in March of last year. Other reports recently have showed that home, auto and retail sales are rising and layoffs are diminishing. That's why Federal Reserve Chairman Alan Greenspan will probably tell lawmakers today that a recovery is underway.
Still, factory capacity is at its lowest level in almost 19 years, consumer confidence fell this month and stock prices are down for the year, suggesting a rebound may be slow to come.
Aircraft and Autos
Analysts had expected January durable goods orders to rise 1.5 percent to $178.6 billion after a previously reported increase of 1.7 percent in December, based on a Bloomberg News survey. They also expected a 0.9 percent rise in bookings excluding transportation equipment. Durable goods are products such as semiconductors, appliances and cars made to last more than three years.
Today's report showed orders for aircraft and parts surged 21.6 percent in January after rising 0.1 percent the previous month. Boeing, the world's biggest airplane maker, said it received 104 aircraft orders, up from 41 bookings the previous month.
That may reflect an order for 150 planes from Ryanair Holdings Plc, Europe's largest low-fare carrier, last month. The airline placed an order for 100 planes and took options for 50 more in the biggest order ever for Boeing 737-800s.
Inventories
The report also showed inventories of durable goods fell 0.6 percent in January, the smallest decrease since April of last year. That's a sign the record pace of inventory reduction last year is nearing an end. Shipments rose 2.9 percent last month.
Orders for automobiles and parts increased 4.3 percent in January, following a 1 percent increase in December. With dealer lots emptying out and consumers buying autos at a faster rate than expected, General Motors is already increasing production.
The largest automaker said this week it expects to build 5.1 million cars and trucks this year, 100,000 more than originally planned. The company increased first-quarter production by 20,000 vehicles to 1.34 million, up 10 percent from a year earlier. For the second quarter, General Motors expects to build 1.425 million vehicles, up 4 percent.
General Motors raised its forecast for industry sales this year by about 1 million vehicles to 16 million, after the decline in January sales was less than forecast. Automakers expected the decrease because high fourth-quarter demand generated by no- interest loans may have taken sales that normally would have come this year.
Computers
``We are building a little bit of inventory heading into the spring, but it's largely underlying demand absorbing the additional production,'' said Paul Ballew, market analyst at General Motors, in a conference call this week with investors.
Machinery orders increased 2.4 percent last month after falling 1.4 percent in December, today's report showed. Orders for computers and electronic products increased 2.2 percent last month after rising 3.7 percent. Semiconductor orders rose 14.2 percent after rising 15.2 percent. Communications equipment orders rose 4.9 percent last month after falling 0.8 percent in December.
Xilinx Inc., the biggest maker of programmable semiconductors, said last week that sales for fiscal fourth- quarter ending in March will increase 10 percent from last quarter. Xilinx's inventories are expected to decline to 100 days this quarter from 131 days in the prior period, the company said.
Orders for defense capital goods fell 2.7 percent last month after increasing 5.1 percent in December.
Defense Orders
Defense orders may rise in coming months. Lockheed Martin Corp., the largest defense contractor, said this month it won a $2.68 billion contract from the U.S. Air Force for 13 F-22 fighter aircraft. The Pentagon has proposed spending $4.3 billion to buy 23 F-22s in fiscal 2003 and to make down payments on 27 more in fiscal 2004.
Non-defense capital goods orders, including aircraft, increased 0.5 percent in January after decreasing 1.2 percent a month earlier. Non-defense capital goods shipments rose 2.4 percent after rising 1.1 percent.
An improvement in manufacturing is likely to become evident Friday with the release of the Institute for Supply Management's February factory index. The index is expected to rise above 50, signaling expansion, for the first time in 1 1/2 years.
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Best Regards, J.T. |
