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Tags: US | Durable | Goods

Durable Goods Post Small November Gain

Thursday, 24 December 2009 09:02 AM EST

Orders to U.S. factories for big-ticket durable goods posted a smaller-than-expected increase in November as declines in demand for aircraft and autos offset strength in a number of other areas.

The gains outside of transportation were an encouraging sign that manufacturing is beginning to revive and will contribute to pulling the economy out of a steep recession.

The Commerce Department said Thursday that orders for durable goods edged up 0.2 percent last month, weaker than the 0.5 percent gain economists had expected. However, excluding transportation, orders rose 2 percent over the October level, double what economists had forecast.

Demand for transportation products sank 5.5 percent as orders for motor vehicles and parts edged down 0.2 percent, the weakest showing in five months. Demand for commercial aircraft plunged 32.6 percent.

The 2 percent increase in orders excluding transportation reflected a rebound from a 0.7 percent decline in October. The October result was revised up from a much bigger 1.3 percent drop previously reported.

Strength in November was shown in a number of areas. Demand for machinery rose by 3.5 percent, orders for primary metals such as steel grew 1.4 percent and orders for computers and electronic products jumped 3.7 percent, the biggest gain since February.

Economists are hoping that the fortunes of the manufacturing sector are beginning to rebound after the recession briefly forced two major U.S. automakers — General Motors and Chrysler LLC — into bankruptcy protection earlier this year.

The overall economy as measured by the gross domestic product grew at an annual rate of 2.2 percent in the July-September quarter, the government reported on Tuesday.

That marked a downward revision from an estimate of 2.8 percent GDP growth made a month ago. However, it was still the first positive performance for GDP after four consecutive quarters of declines. It is the strongest sign to date that the recession that began in December 2007 has ended.

Economists expect GDP to rebound to even stronger growth in the current October-December quarter, helped by a shift by companies from reducing inventories to restocking their depleted shelves, a change that will result in increased orders and production at U.S. factories.

The concern, however, is that the economic recovery could falter in coming months if consumers, fearful about continued increases in the jobless rate, decide to cut back on their spending, which accounts for 70 percent of total economic activity.

The government reported Wednesday that consumer spending rose by 0.5 percent in November, the second straight monthly increase as incomes, the fuel for future spending, rose by 0.4 percent, the fastest pace in six months. Analysts, however, are worried that these gains will taper off in coming months.

The report on durable goods — items expected to last at least three years — showed that demand for non-defense capital goods excluding aircraft rose by 2.9 percent in November, rebounding from a 2 percent drop in October. It was the best showing since a similar gain in September. This category is closely watched because economists considered it a good proxy for business investment.

© Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Economy
Orders to U.S. factories for big-ticket durable goods posted a smaller-than-expected increase in November as declines in demand for aircraft and autos offset strength in a number of other areas.The gains outside of transportation were an encouraging sign that manufacturing...
US,Durable,Goods
505
2009-02-24
Thursday, 24 December 2009 09:02 AM
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