Orders placed with U.S. factories increased less than forecast in December, reflecting a drop in non-durable goods that partly countered gains in construction equipment and computers.
Bookings climbed 1.8% after a revised 0.3% drop in November that was initially reported as unchanged, figures from the Commerce Department showed today in Washington. The Bloomberg survey median called for a 2.3% gain. Demand for durable goods increased 4.3%, little changed from a 4.6% gain estimated last week, while non-durables dropped 0.3% on declines in petroleum and tobacco.
A fourth-quarter pickup in consumer spending is spurring companies including automakers such as Chrysler Group LLC and Ford Motor Co., reviving a manufacturing industry that cooled in the second half of 2012. The acceleration extended into January, according to a gauge last week that showed factories expanded at the strongest pace in nine months.
“Manufacturing’s fine,” said Brian Jones, senior U.S. economist at Societe Generale in New York, who projected a 1.9% gain in orders. “The economy continues to improve.”
Estimates in the Bloomberg survey of 63 economists ranged from a drop of 0.3% to a 3% gain.
Job Prospects
A measure of job prospects fell in January for the first time in four months as more Americans said jobs were harder to get, another report showed. The Conference Board’s Employment Trends Index decreased 0.1% to 109.38 from the prior month’s revised reading of 109.47, the New York-based private research group said. The measure increased 2.7% from January 2012.
Stocks fell, after the Standard & Poor’s 500 Index jumped to a five-year high, on concern over increasing political tension in Europe. The S&P 500 dropped 0.6% to 1,503.63 at 10:25 a.m. in New York.
Factory orders excluding the volatile transportation category increased 0.2% in December after falling 0.2% the previous month. Demand minus military hardware advanced 0.3%.
The jump in bookings for durable goods was paced by a 12.2% increase in construction equipment and a 6.4% gain for computers.
Non-Durable Goods
The drop in orders for non-durable goods, reported today for the first time, may have been influenced by swings in prices. Demand for petroleum and coal products fell 0.6% in December, while tobacco slumped 23.1%.
Demand for capital goods excluding aircraft and military equipment, and including items such as computers, engines and communications gear, fell 0.3% compared with the 0.2% increase the Commerce Department estimated in its Jan. 28 durable goods report. The increase for November was revised up to 3.3% from 3%.
Shipments of those goods, used in calculating gross domestic product, climbed 0.2%, about the same as the previously estimated 0.3% gain. Total shipments advanced 0.4%, keeping the inventory-to-sales ratio at 1.27 months.
Today’s updated figures will probably not alter the data issued by the Commerce Department last week. Business investment in equipment and software climbed at a 12.4% annual rate in the fourth quarter, the best performance in more than a year, according to last week’s report.
Economy Stalls
Growth in the world’s largest economy unexpectedly stalled in the last three months of 2012 as military outlays plunged by the most in 40 years and inventories grew at a slower pace. Gross domestic product shrank at a 0.1% annual rate from October through December.
Factory inventories climbed 0.1% in December, today’s report showed. A smaller gain in stockpiles subtracted about 1.3 percentage points from growth last quarter.
The auto industry remains a source of strength for manufacturing and the economy. Light vehicles sold at a 15.2 million annual rate in January after 15.3 million in December, according to data from Ward’s Automotive Group.
Sales for Chrysler, majority owned by Fiat SpA, climbed to 117,731 cars and light trucks from 101,149 a year earlier, led by demand for its Dodge models, the Auburn Hills, Michigan-based company said last week in a statement. The Dodge Dart compact had its best month since its introduction in June.
Auto Sales
Chrysler plans to boost production to 2.6 million vehicles in 2013, from 2.4 million last year and 2 million in 2011, said Scott Garberding, senior vice president of manufacturing. The company’s sales gain in January extended Chrysler’s stretch of year-over-year increases to 34 months.
A report last week signaled manufacturing is improving at a faster-than-expected pace. The Institute for Supply Management’s factory gauge advanced to 53.1 last month from December’s 50.2, exceeding the highest estimate in a Bloomberg survey of 86 economists. Readings above 50 indicate expansion.
Stabilization in the global economy may begin helping companies such as United Technologies Corp. The Hartford, Connecticut-based maker of Carrier air conditioners and Otis elevators said its Asian sales will rise about 7% to 8% in the next decade on more construction of skyscrapers in China.
Growth in the U.S. may be 2% to 3% and little changed in Europe, Chairman and Chief Executive Officer Louis Chenevert, 55, said in an interview in Singapore today.
“We see a lot of continued growth momentum,” Chenevert said.
