Orders to U.S. factories plunge on airplanes, computers

Durable Goods

Orders for durable goods represent demand for items made to last at least three years and make up more than half of total factory bookings. The increase in demand for non-durable goods, the only part of today’s report that hasn’t been previously reported, reflected a 6.9 percent gain in petroleum and coal products and an 11.8 percent jump in tobacco.

Orders for capital goods excluding aircraft and military equipment, a measure of future business investment increased 1.1 percent, the same as reported last week and following declines of 5.6 percent and 2.7 percent in the prior two months. Shipments of those goods, which are used in calculating gross domestic product, decreased 0.7 percent after dropping 1.6 percent in July.

Applied Materials Inc., the largest producer of chipmaking equipment, said yesterday it plans to eliminate 900 to 1,300 jobs, or 6 percent to 9 percent of its worldwide workforce.

Computer Demand

Applied Materials’ customers, such as Intel Corp., are struggling with slowing orders for personal-computer components, reducing their appetite for spending on increasing output.

Micron Technology Inc., the largest U.S. maker of memory chips, last week reported a wider fourth-quarter loss and lower revenue as lackluster demand for personal computers reduced sales of components.

Another report this week indicated the slump in manufacturing may be easing. Factories unexpectedly expanded in September as orders and production improved, according to data from the Tempe, Arizona-based Institute for Supply Management.

Automakers have been one source of strength, with cars and light trucks selling at an annualized rate of 14.9 million last month, the industry’s best sales since March 2008. Toyota Motor Corp. reported the biggest September gain, with sales surging 42 percent from the same time last year, more than the median estimate of economists in a Bloomberg survey. Chrysler Group LLC posted a 27 percent gain over September 2011, its 18th month of year-over-year sales growth.

Auto Sales

The U.S. averaged a 14.5 million annualized sales rate in the third quarter, the fastest since the 15.3 million pace set in 2008’s first quarter, according to researcher Autodata Corp., based in Woodcliff Lake, New Jersey.

“The stiffest headwinds are uncertainty, some of which is related to the sovereign debt crisis in Europe and concerns about the pace of growth here at home,” Kurt McNeil, vice president of U.S. sales operations at General Motors Co., said on an Oct. 2 call with analysts. “‘Still, we believe all of the factors are net positive. In other words, autos will continue to be a bright spot for the U.S. economy.”

Factory inventories increased 0.6 percent in August for a second month, today’s Commerce Department report showed, while shipments fell 0.3 percent, bringing the inventory-to-shipments ratio up to 1.28 months from 1.27 months.

Bloomberg News

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