AP News

Ahead of the Bell: US factory orders

WASHINGTON (AP) — The Commerce Department reports on U.S. factory orders in December. The report will be released at 10 a.m. EST Tuesday.

ORDERS UP: The expectation is that orders rose 0.9 percent in December, according to economists surveyed by FactSet.

MANUFACTURING OUTLOOK: In November, orders climbed, led by a surge in aircraft demand, and businesses stepped up spending on machinery, computers and other long-lasting goods, a sign of investment that could fuel economic growth.

But orders may have slowed in December, reflecting in part the expiration of tax breaks which had fueled business investment in new equipment.

The report Tuesday will update the preliminary estimate on demand for durable goods, items expected to last at least three years, and will include figures on demand for nondurable goods such as chemicals, paper and food.

The Institute for Supply Management, a trade group of purchasing managers, said Monday that its index of manufacturing activity fell to 51.3 in January from 56.5 in December. It was the lowest reading since May although any reading above 50 signals growth in manufacturing.

The January performance of the ISM index suggests that U.S. manufacturing slowed at the beginning of this year after a strong finish last year.

Auto sales have decelerated and businesses are spending cautiously on machinery and other large factory goods.

The slowdown could mean that economic growth in the first three months of this year will get less support from manufacturing.

But some economists said that the weak ISM reading may reflect unusually bad weather in January.

The Federal Reserve reported that factory output in December rose for a fifth straight month. Manufacturers produced more cars, trucks and appliances in December.

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