AP News

Ahead of the Bell: US factory orders


WASHINGTON (AP) — U.S. factory orders likely rose in December even though companies slowed their orders of goods that signal investment plans.

Economists forecast that orders rose 2 percent in December, according to a survey by FactSet. The Commerce Department will release the report at 10 a.m. EST Monday.

A preliminary report on long-lasting manufactured goods showed orders that reflect business investment plans increased for the third straight month in December but the advance was modest.

The preliminary report showed that orders for durable goods, items expected to last at least three years, rose 4.6 percent in December, compared to November, led by sizable gains in demand for commercial aircraft and military aircraft.

The report Monday will update the estimate for durable goods and include an estimate of demand for nondurable goods, items such as paper, chemicals and food.

The government reported that the overall economy actually contracted in the October-December quarter at an annual rate of 0.1 percent, the first negative reading since the recession was ending in the summer of 2009. The decline reflected a big drop in defense spending, slower business stockpiling and a fall in exports.

However, other parts of the economy showed strength including housing and business investment on equipment and software, which rose at an annual rate of 12.4 percent, the best showing in more than a year and a rebound from a decline in business investment in the July-September quarter.

In other signs that the economy could be strengthening, the government reported Friday that employers added 157,000 jobs in January and job growth at the end of 2012 proved stronger than initially thought.

And the Institute for Supply Management reported that manufacturing grew at a faster pace in January, driven by an increase in new orders and more hiring at factories.

The institute's manufacturing index rose to 53.1 from 50.2 in December. It was the highest reading since April.

The report was an indication that manufacturing has started to grow again after struggling through most of 2012. Uncertainty about tax increases and deep government spending cuts had led many companies to reduce orders for machinery and equipment in the summer of 2012. And a weaker global economy had dampened demand for U.S. exports.


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