Factory Orders Rise, but Business Investment Slips

Factory orders rise, but business investment slipsWASHINGTON (AP) - Orders for factory-made goods that signal business investment plans fell for a second straight month, part of a mixed report on manufacturing in November.

The drop in demand for so-called core capital goods was offset by a sharp rise in volatile airplane orders. That lifted overall factory orders 1.8 percent, the Commerce Department said Wednesday.

Core capital goods, such as computers and electronic equipment, are closely watched because they are a good proxy for business investment.

Still, the decline may end up being less of a concern after a private survey showed earlier this week that U.S. factories ended the year with their best month of growth since late spring.

Factories hired more workers last month, saw the most growth in new orders since April and ramped up production, the Institute for Supply Management said Tuesday.

John Ryding and Conrad DeQuadros, economists with RDQ Economics, said economists are more likely to overlook the weak report on factory orders after seeing the ISM survey.

"This report for November activity feels like somewhat old news since the state of manufacturing in December has already been indicated in yesterday's ISM report and it appears from that survey that manufacturing growth is picking up," the economists wrote in a note to clients.

A bigger issue may be the impact that Europe's debt troubles could have on U.S. export growth. Many economists believe that Europe, a major market for American goods, has already slipped into a recession.

In addition to the problems in Europe, economists expect that economic growth in Asia will slow in coming months as well.

Both could weaken U.S. growth.

The government report on factory orders also showed:

Demand for durable goods, items expected to last at least three years, rose 3.7 percent, reflecting gains in demand for airplanes, autos, primary metals such as steel and industrial machinery.

Demand for nondurable goods edged up 0.3 percent as demand increased for petroleum, chemical products and clothing. The rise in durable goods was revised down slightly from a 3.8 percent preliminary estimate made two weeks ago.

Demand for transportation products increased 14.7 percent, propelled by a 14.7 percent surge in orders for commercial aircraft.

Orders for motor vehicles and parts rose 0.9 percent. Automakers are closing out a solid year in which easier credit and pent-up demand are helping boost sales as the industry recovers from the 2007-2009 recession when sales fell to the lowest level in decades.

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Mike

Same OLD, tired, libtard, LIE! Always with the single digit growth. Real inflation is over 15% and rising. This means we spent more to get LESS! That’s called CONTRACTION to all non kool aid libtards!

January 05 2012 at 6:31 PM Report abuse rate up rate down Reply
cpo1514

Orders up 1.8% thats it????? What the f.... is this the Obama Praise posting by Huffy????

January 05 2012 at 11:18 AM Report abuse rate up rate down Reply
Somebody

Every year the government is borrowing 1.5 trillion more than it collects in taxes and spends it to sustain our unsustainable life style. Folks, this is a dead end. Borrowing and spending on consumer products will not make a recovery. Consumer economy is a myth. Google for "CREDIT INFLATION" to understand why. Consumers consume. Consumers go into debt and they become poor. Only producers prosper. We are not investing the borrowed money to create value that there is a demand for. Borrowing from China to buy Chinese products is not going to fix anything. We already have excess industrial capacity. The problem is that the world demand has saturated. Even if we increase our capacity to produce more, there is nobody who can afford to buy the products! The world needs time to rest and reduce debt levels so that we can start a phase of expansion again! We are going into Kondratieff Winter and Spring is still far away! Deflationary depression is near. Keynesian spending will only postpone it but will make it worse when it finally arrives!

January 05 2012 at 12:01 AM Report abuse rate up rate down Reply