AP News

Ahead of the Bell: US durable goods


WASHINGTON (AP) — U.S. companies likely increased their orders for long-lasting manufactured goods that reflect investment plans. That would be an encouraging sign for the economy.

Economists are forecasting that orders for durable goods rose 1.9 percent in December, according to a survey by FactSet. The Commerce Department will release the report at 8:30 a.m. EST Monday.

In November, companies for the second straight month ordered more goods that signal investment plans.

Orders for core capital goods, the category that is considered a proxy for business investment plans, increased a solid 2.6 percent in November after a 3 percent rise in October which had been the strongest gain in 10 months.

Factories appear to be recovering slowly from a slump earlier in the year although there are still concerns given a weak global economy that is restraining U.S. exports.

Analysts believe that companies will boost spending further on computers and other equipment to expand and modernize now that Congress and President Barack Obama have reached a deal on taxes that will remove uncertainty that had been weighing on business investment decisions.

The last-minute agreement was approved by Congress on Jan. 1 and signed by Obama the next day. It averted widespread tax increases that had threatened to push the country back into recession. Still, most Americans will see some increase in taxes this year, which will likely slow consumer spending.

The Institute for Supply Management reported that U.S. manufacturing had grown slightly in December with its manufacturing index rising to 50.7. That was up from a reading of 49.5 in November, which had been the lowest reading since July 2009, one month after the recession ended.

A reading above 50 indicates growth in manufacturing, while a reading below signals contraction.

The economy grew at an annual rate of 3.1 percent in the April-June quarter. The government will provide its first look at overall economic growth in the October-December quarter on Wednesday. Many analysts believe growth slowed in the final three months of last year to less than 2 percent.


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