Tags: Durable-Goods | Orders | Increase | Surge | Aircraft

Durable-Goods Orders Increase on Surge in Aircraft

Thursday, 24 Feb 2011 08:50 AM

Orders for U.S. durable goods climbed in January as demand for aircraft rebounded after plunging the prior month.

Bookings for goods meant to last at least three years rose 2.7 percent after a 0.4 percent drop in December that was smaller than previously estimated, figures from the Commerce Department showed today in Washington. Orders excluding transportation equipment unexpectedly dropped, reflecting a recurring pattern of declines in capital goods in the first month of a quarter.

Manufacturers from Intel Corp. to Navistar International Corp. are forecasting rising demand as firms in the U.S. and abroad ramp up investment. While factories remain a mainstay of the recovery, limited improvement in the labor and housing markets helps explain why the Federal Reserve is forging ahead with a plan to bolster the economy.

“Manufacturing has stepped up in the last few months,” Jim O’Sullivan, global chief economist at MF Global Inc. in New York, said before the report. “The trend has been up pretty solidly.”

The median forecast of 76 economists surveyed by Bloomberg projected a 2.8 percent increase in total orders. Estimates ranged from no change to a 9.5 percent increase.

Excluding transportation, bookings decreased 3.6 percent after a 3 percent December gain that was more than three times larger than the prior estimate. They were forecast to rise 0.5 percent, according to the Bloomberg survey.

Bookings for civilian aircraft totaled $7.4 billion after collapsing to $148 million in December.

Plane Orders

Boeing Co., the largest U.S. maker of aircraft, this month said January airplane orders fell to 34 from 55 in December. Boeing reported 17 orders in November. Industry data may not correlate precisely with the government statistics on a month-to- month basis.

Bookings for non-defense capital goods excluding aircraft, items like computers and communications gear, fell 6.9 percent, the most since January 2009, after a 4.3 percent gain in December that was more than double the previous estimate.

Over the past three years, these orders have dropped in the first month of a quarter every time except once.

“It’s entirely seasonal factors,” O’Sullivan said before the report. “There’s been a pretty consistent pattern. If anything, manufacturing growth has accelerated recently.”

Shipments of non-defense capital goods excluding aircraft, used in calculating gross domestic product, decreased 2 percent after rising 2.5 percent in December.

Business Investment

The business spending that helped lead the economy out of recession may gain a second wind from a new tax provision that allows companies to depreciate 100 percent of investments in capital equipment this year.

More orders are prompting some manufacturers to add to payrolls.

“I do think we’ll expand, I think it’ll be more surgical and incremental,” Gregory Brown, chief executive officer of Motorola Solutions Inc., said in a Feb. 18 interview at a Business Council meeting in Fort Lauderdale, Florida. “They’ll be opportunities for hiring, but I would characterize it as relatively modest going forward.”

Intel, the world’s largest chipmaker, last week announced plans to build a $5 billion microprocessor plant in Chandler, Arizona, and hire 4,000 U.S. employees this year.

Paul Otellini, the chief executive officer of Santa Clara, California-based Intel, was named by President Barack Obama last week to a new presidential council on jobs and competitiveness, headed by General Electric Co. CEO Jeffrey Immelt. The panel, created in January to find ways to encourage hiring and boost U.S. economic competitiveness, is scheduled to hold its first meeting at the White House today.

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Orders for U.S. durable goods climbed in January as demand for aircraft rebounded after plunging the prior month.Bookings for goods meant to last at least three years rose 2.7 percent after a 0.4 percent drop in December that was smaller than previously estimated, figures...
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Thursday, 24 Feb 2011 08:50 AM
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