Orders for durable goods climbed more than forecast in December, showing U.S. manufacturing rebounded following a mid-year slump.
Bookings for goods meant to last at least three years rose 4.6%, exceeding the highest forecast of economists surveyed by Bloomberg, after a 0.7% gain in November, a Commerce Department report showed today in Washington. The median forecast of 76 economists surveyed by Bloomberg called for a 2% advance.
Improving auto sales and a rebound in housing are underpinning the economic expansion, indicating orders will keep coming in for manufacturers from General Electric Co. to DuPont Co. Faster growth in overseas markets and an agreement in Congress to avoid automatic government-spending cuts would help lift business confidence and spur greater investment.
Demand is “back on track following a soft patch,” said Peter Newland, an economist in New York for Barclays Plc. “By the fourth quarter, some confidence about global growth returned to the corporate sector.”
Estimates in the Bloomberg survey ranged from a decrease of 1.4% to a 4.5% advance.
Stock-index futures held gains after the figures, with the contract on the Standard & Poor’s 500 Index expiring in March rising 0.2% to 1,499.1 at 9:04 a.m. in New York.
December capped the first four-month gain in demand for durable goods since comparable records began in 1992.
Excluding demand for transportation equipment, which is often volatile, orders increased 1.3%, also beating the median projection which called for a 0.8% advance.
Aircraft Bookings
Aircraft bookings, which are often volatile, rose 10.1% after falling 12.9% in November, today’s report showed. Boeing Co., the Chicago-based aerospace company, said it received 183 orders in December, up from 124 the prior month.
Orders for non-defense capital goods excluding aircraft, a proxy for future business investment in items like computers, engines and communications gear, increased 0.2% following gains of 3% in November and October. The advance over the past three months is the biggest since mid-2011.
Shipments of those capital goods, used in calculating gross domestic product, increased 0.3% after rising 2.2% the prior month, also more than previously estimated. Sales climbed for three consecutive months, the longest stretch of gains since mid-2011.
Capital Goods
Orders for non-defense capital goods excluding aircraft have climbed for three straight months just one other time in the past five years, from May through July 2011.
A report on Jan. 30 may show GDP expanded at a 1.1% annual pace in the final quarter of 2012, helped by growth in consumer spending, corporate investment and housing, according to the Bloomberg survey median. Capital spending dropped at a 2.6% annual rate in the third quarter, the first decline in more than three years.
Automobile purchases remain a source of strength for factories. Cars and light trucks sold at a 15.3 million annual rate in December after 15.5 million the prior month, the best back-to-back showing since early 2008, according to Ward’s Automotive Group.
Rising demand for plastics used in autos helped DuPont, the biggest U.S. chemical maker by market value, to report fourth- quarter earnings that exceeded analysts’ estimates. The company, based in Wilmington, Delaware, also said sales in 2013 will climb to $36 billion from $34.8 billion.
‘Pent-Up Demand’
“The U.S. is experiencing a weak recovery with bright spots and pent-up demand for housing and autos,” Chief Executive Officer Ellen Kullman said on a Jan. 22 earnings call.
Manufacturers are also gaining from improving overseas markets led by China, where economic growth accelerated in the fourth quarter for the first time in two years.
General Electric’s fourth-quarter profit topped analysts’ estimates as demand in emerging markets fueled the aviation and health-care divisions, which helped build a record $210 billion order backlog for the Fairfield, Connecticut-based company.
“We saw real strength in the emerging markets and the developed regions stabilized,” Chief Executive Officer Jeffrey Immelt said on a Jan. 18 conference call. GE “entered 2013 with substantial momentum” following “solid order growth in five of the six businesses,” he said.
Caterpillar Inc., the world’s largest maker of construction and mining equipment, today reported fourth-quarter profit that topped analysts’ estimates.
“We’re encouraged by recent improvements in economic indicators, but remain cautious,” Chief Executive Officer Doug Oberhelman said in a statement.
Businesses still face the risk that lawmakers fail to avert across-the-board government spending cuts scheduled to begin March 1, even after the fiscal pact passed by Congress on Jan. 1 avoided sweeping tax increases that had threatened to crimp consumer spending.
