Durable Goods Orders Rise by 5.2 Percent
WASHINGTON - Orders to factories for big-ticket manufactured goods soared in December by the largest amount in five months, 5.2 percent increase.
The increase in orders, as reported Tuesday by the Commerce Department, was larger than had been expected. In part the strength came from an increase in demand for commercial aircraft, but even excluding the transportation sector, orders posted a solid 2.6 percent gain.
The December orders increase was more than double what had been gloomy pundits expected. Analysts were looking for a weaker performance. The Institute for Supply Management manufacturing index dipped to 47.7 for December. Any reading below 50 is considered recession territory for manufacturing.
The big jump in December closed out a lackluster year for manufacturers. Orders for the total year managed to rise by just 0.97 percent following much bigger increases of 6.31 percent in 2006 and 9.45 percent in 2005. It was the poorest showing since orders actually fell by 3.17 percent in 2002, a year when the country was still struggling to emerge from the 2001 recession.
The strength in December was led by an 11.3 percent rise in demand for transportation products. That reflected an 11.3 percent jump in orders for commercial aircraft which offset a 2.3 percent fall in demand for autos and auto parts as automakers continue to struggle with weak demand as gasoline prices have reflected price adjustments due to the weak dollar.
A key category of business investment, non-defense capital goods excluding aircraft, rose by 4.4 percent in December, the first increase in this closely watched category since September, and the biggest increase since last March.
The big jump in December closed out a lackluster year for manufacturers. Orders for the total year managed to rise by just 0.97 percent following much bigger increases of 6.31 percent in 2006 and 9.45 percent in 2005.
The strength in December was led by an 11.3 percent rise in demand for transportation products. That reflected an 11.3 percent jump in orders for commercial aircraft which offset a 2.3 percent fall in demand for autos and auto parts as automakers continued to struggle with weak demand amid soaring gasoline prices.
A key category of business investment, non-defense capital goods excluding aircraft, rose by 4.4 percent in December, the first increase in this closely watched category since September, and the biggest increase since last March.
The report of the strong showing in December came at a time of growing concern that the country could be slipping into a recession as the economy has had to sustain a variety of blows from increased minimum wages, a slump in housing to energy cost adjustments and a credit squeeze.
The Federal Reserve was beginning a two-day meeting Tuesday, and the expectation is that the central bank will cut rates by perhaps a half percentage point as further insurance against a recession. Last week, the Fed slashed a key rate by three-quarters of a point, the biggest reduction in more than two decades and its first rate change between meetings since the September 2001 terrorist attacks.
The government will issue its first look Wednesday at the overall economy's performance for the final three months of 2007. Many economists believe that will show the gross domestic product (GDP) was rising at 1.2 percent annual rate in the October-December quarter, a slowdown from the 4.9 percent growth rate of the July-September period.
The report on durable goods showed that the strength was not just confined to the aircraft sector. Strong gains were also reported in demand for fabricated metal products, machinery, computers and communications equipment.
AP contributed to this report. |
