Your Economy (No Politics)

[Bullwinkle]

U.S. Jan. Factory Orders Fall 4.5%; Rise Ex-Transport
by Bob Willis, Bloomberg News


March 6 (Bloomberg) -- U.S. factory orders fell in January by the most since mid-2000 as bookings for Boeing Co. aircraft declined. Not counting transportation equipment, orders increased.

Factory orders dropped 4.5 percent to $398.2 billion after rising 1.6 percent the previous month, the Commerce Department said today in Washington. Excluding transportation equipment, orders rose 1.6 percent.

Boeing Co., the world's biggest aircraft maker, received orders for 39 planes in January, compared with 204 the prior month when orders surged after machinists ended a strike. The increase excluding motor vehicles and aircraft was the third in a row, the longest such stretch since March 2005, as companies replace equipment, economists said.

``You look at the cumulative gain in the last four months, and the factory sector looks quite good,' said Kevin Harris, chief U.S. economist at Informa Global Markets in New York.

Economists surveyed by Bloomberg News forecast a median decline in factory orders of 5.4 percent, with forecasts ranging from a decline 4 percent to a drop of 7.5 percent. The December gain was previously reported as 1.1 percent.

Durable Goods

Bookings for durable goods, which account for about 54 percent of all factory orders, fell 9.9 percent in January, after rising 2.5 percent in December.

Spending by companies such as Caterpillar Inc. to upgrade equipment and expand facilities may spur economic growth as a slowing housing market contributes less to consumer spending, economists said.

Capacity utilization, the percentage of potential factory production in use, edged down in January from the previous month, when it reached its highest rate since November 2000, the Federal Reserve said Feb. 16.

Commercial aircraft orders decreased 68 percent after falling 2.8 percent in December. Orders for all transportation equipment fell 31 percent after rising 3.6 percent.

Orders of household appliances rose 16 percent in January after falling 12 percent the previous month. Orders for computers decreased 14 percent after rising 2.3 percent. Orders for mine and oil field equipment rose 22 percent, while orders for industrial machinery rose 55 percent.

Home Sales

Contracts to purchase previously owned U.S. homes fell in January for a fifth straight month as higher prices and mortgage rates discouraged buyers, the National Association of Realtors reported today.

Housing sales are slowing after five years of records, and economists say housing may subtract from economic growth this year. Corporate spending may take up part of that slack, economists say.

``This is a sector that should be one of the engines of growth and should keep the economy healthy in the face of the weakening housing market,' Ethan Harris, senior economist at Lehman Brothers in New York, said before the report.

Orders for non-defense capital goods excluding aircraft, an indicator of future business investment, rose 0.1 percent after rising 4.9 percent. Shipments of such goods, which the government uses to calculate figures on gross domestic product, rose 0.4 percent after rising 3.8 percent.

Autos, Parts

Autos and auto parts orders decreased 2.9 percent after rising 6.6 percent a month earlier.

Orders for non-durable goods, which include industrial chemicals, drugs, papers and textiles, rose 2.2 percent after rising 0.5 percent the prior month.

Factory inventories increased 0.5 percent in January after rising 0.6 percent in December. The inventory-to-shipments ratio was unchanged at 1.15 months.

Unfilled orders decreased 0.7 percent to $633.7 billion after rising 2.6 percent in December.

Half of the chief executive officers in a Business Roundtable survey released March 2 said they plan to increase capital spending during the next six months, and 85 percent predict their sales will rise.

Institute for Supply Management surveys on the manufacturing and non-manufacturing segments of the economy both showed gains in February.

Peoria, Illinois-based Caterpillar, the world's largest maker of earthmoving equipment, is among companies gearing up to meet increased demand, both from within the U.S. as well as abroad.

``This year we're investing $1.75 billion in new capital, which will allow us to take care of those manufacturing bottlenecks and grow organically,' Caterpillar Inc. Chief Executive Officer James Owens said Feb. 17 at the Business Council meeting in Boca Raton, Florida.

``We've grown from $22 billion in sales in 2003 to this year's outlook of about $40 billion,' he said. ``We've nearly doubled the size of the company in three short years.'

http://www.bloomberg.com/apps/news?pid=10000087&sid=aKWWAFr.qB_k