Orders jump for most US long-lasting factory goods

  • Associated Press February 27, 2013

WASHINGTON — Orders for U.S. factory goods that signal business investment plans jumped last month by the most in more than a year, suggesting companies are confident about their business prospects.

The Commerce Department says orders for so-called core capital goods, which include machinery, equipment and software, rose 6.3 percent in January from December. A sharp drop in demand for commercial aircraft caused overall durable goods orders to drop 5.2 percent, the first decline since August.

Orders for commercial aircraft are volatile from month to month and can cause large swings in the overall figure. Boeing reported orders for only two planes in January, down from 183 in December. Orders for defense equipment also plummeted by the most in more than 12 years.

The increase in core capital goods suggests companies are willing to expand their production capacities despite worries that automatic government spending cuts will slow the economy in the coming months.

About $85 billion in spending cuts are scheduled to kick in Friday and there is little sign that the White House and Congress will reach a deal to avoid them. Defense Department officials may have slowed purchases in January in anticipation of the cutbacks.

Core capital goods orders dipped 0.3 percent in December after posting strong gains of 3.3 percent in November and 3 percent in October.

The report suggests manufacturing is picking up. The Institute for Supply Management said earlier this month that factory activity grew in January at the fastest pace in nine months. Measures of new orders and hiring both rose.

But industrial production fell in January after two months of increases, the Federal Reserve said. Much of the decline reflected a big drop in auto production that was likely temporary. The auto industry is coming off its best year for sales in five years. Sales continue to rise, so production will likely rebound in February.


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