Tags: US | Factory | Orders

Factory Orders Rise on Surge in Aircraft Demand

Thursday, 04 Mar 2010 10:05 AM

Orders to U.S. factories posted the biggest increase in four months in January, led by a surge in demand for commercial aircraft. The increase was another sign that manufacturing is helping to support the economic recovery.

The Commerce Department said Thursday that factory orders rose 1.7 percent in January, slightly below the 1.8 percent gain economists had expected. It was the best showing since a 1.8 percent advance in September.

The gain was propelled by a 118.6 percent surge in orders for commercial airplanes. Excluding transportation, orders were up a much more modest 0.1 percent.

Orders for durable goods, items expected to last three years, increased 2.6 percent. That was slightly lower than the a preliminary estimate the government made last week that durable goods orders had risen 3 percent in January.

Orders for nondurable goods, items such as chemicals, paper and food, rose by 0.9 percent in January following a gain of 1.3 percent in December.

While the overall increase in factory orders was dominated by aircraft, it still marked the ninth gain in the past 10 months. American manufacturers, who were battered during the severe recession, have been helped in recent months not only by a rebound in domestic orders but by rising demand in overseas markets.

U.S. manufacturers have benefited by last year's fall in the value of the dollar, which makes their products cheaper in foreign markets.

The concern, however, is that the resurgence in factory production could falter in coming months unless the jobs picture starts improving. The unemployment rate stood at 9.7 percent in January and economists believe it rose to 9.8 percent in February, a report that will be released Friday.

High unemployment depresses incomes and consumer spending, which accounts for 70 percent of total economic activity.

The factory orders report showed that total transportation orders were up 15 percent, reflecting the jump in commercial aircraft. Demand for motor vehicles fell by 1.1 percent after having risen by 5.4 percent in December.

In other categories, orders for primary metals rose 2.1 percent led by an 11.1 percent increase in orders for iron and steel.

Orders for heavy machinery fell 9.2 percent in January after posting a 7.3 percent December increase.

Orders for computers and other electronics products rose 1.8 percent reflecting a big surge in demand for defense communications equipment which offset a drop in orders for computers.

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Orders to U.S. factories posted the biggest increase in four months in January, led by a surge in demand for commercial aircraft. The increase was another sign that manufacturing is helping to support the economic recovery. The Commerce Department said Thursday that...
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2010-05-04
Thursday, 04 Mar 2010 10:05 AM
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