Factory Orders Drop
March 4, 2004
By Jeff Bater
Of Dow Jones Newswires
WASHINGTON -- Demand for manufactured goods fell in January for the second time in three months as transportation orders tumbled, but an indicator of spending by businesses rose.
U.S. factory orders declined by 0.5% to $343.17 billion, after an upwardly revised 1.8% advance in December, the Commerce Department said Thursday. December factory orders were previously estimated as rising 1.1%.
The government lowered an estimate issued a week ago for January orders for durable goodss -- items meant to last three years or longer. It said demand for those goods designed to last at least three years decreased by 2.3%; the earlier projection had durables falling 1.8%.
A barometer of business investment moved higher. Nondefense capital goods excluding aircraft rose 1.3%.
The factory-orders report was slightly above expectations on Wall Street. Analysts had predicted overall demand would go down 0.6% in January.
While total orders were down, positive signs emerged for the sector in other data this week. The Institute for Supply Management, for instance, said its index of manufacturing activity moved to 61.4 in February. While lower than January's 63.6 level, the gauge has now been above 60 for four months straight. Readings above 50 indicate a generally expanding manufacturing economy.
[It is amazing how EVERYTHING is put in a positive spin - mish]
And the Federal Reserve said Wednesday in its beige book survey of anecdotal reports from the Fed's 12 district banks that manufacturing activity grew in 11 of its 12 districts during January and February. Cleveland reported steady, but not expanding, activity in the surrounding sector. The weaker dollar helped some manufacturers by boosting exports; some producers, however, said the sliding dollar contributed to rising input costs, the central bank's report noted.
In the Commerce Department's Thursday report on factory orders, nondurable goods orders rose 1.6% after rising 2% in December. Consumer-goods orders increased by 0.5% after rising 1.2% in December. Consumer durable-goods orders were down by 4%; consumer nondurables rose 2.1%.
In its biggest drop since September 2002, demand for transportation-related goods tumbled by 10.3%, led by a sharp decrease in aircraft. Nondefense aircraft and parts orders dropped 28.1%. Defense aircraft orders dropped 34%, while orders for cars and parts slid 3.2%. Orders for ships and boats rose 3.2%.
Excluding transportation orders, overall factory orders would have gone up 1.4%.
Defense capital-goods orders declined by 15% in January. Without taking into account defense orders, factory orders would have been unchanged.
Demand for all nondefense capital goods -- business equipment meant to endure at least 10 years -- decreased by 0.7%.
Orders for computers and electronic products increased 4.9%. Primary metals went up 3.1%; machinery orders decreased 4.2% and electrical equipment and appliances rose by 3.5%.
Factory shipments went up 0.5%. Unfilled orders were down 0.1%. Factory inventories increased by 0.2%.
smartmoney.com |
