Goods orders exceed forecast in sign of U.S. factory rebound

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.

Bloomberg News

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