Orders jump for key US long-lasting factory goods

 
No Author Published: February 27, 2013    Comment on this article Leave a comment

photo - In this Tuesday, Jan. 8, 2013 photo, Andy Anderson, a salesman at the Aggressive Appliances store in Orlando, Fla., looks over washers and dryers on display. Orders for U.S. factory goods that signal business investment plans jumped in January by the most in more than a year, suggesting companies are confident about their business prospects. The Commerce Department said Wednesday, Feb. 27, 2013, that orders for so-called core capital goods, which include industrial machinery, construction equipment and computers, rose 6.3 percent in January from December. A sharp fall in demand for commercial aircraft caused overall durable goods orders to drop 5.2 percent, the first decline since August. (AP Photo/John Raoux)
In this Tuesday, Jan. 8, 2013 photo, Andy Anderson, a salesman at the Aggressive Appliances store in Orlando, Fla., looks over washers and dryers on display. Orders for U.S. factory goods that signal business investment plans jumped in January by the most in more than a year, suggesting companies are confident about their business prospects. The Commerce Department said Wednesday, Feb. 27, 2013, that orders for so-called core capital goods, which include industrial machinery, construction equipment and computers, rose 6.3 percent in January from December. A sharp fall in demand for commercial aircraft caused overall durable goods orders to drop 5.2 percent, the first decline since August. (AP Photo/John Raoux)

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Several economists warned that orders were likely to fall in the coming months after such a big gain.

"We don't expect businesses suddenly to throw caution to the wind," Paul Ashworth, an economist at Capital Economics, said in a note to clients.

About $85 billion in spending cuts are scheduled to kick in Friday and there is little sign that the White House and Congress will reach a deal to avoid them. Defense Department officials may have slowed purchases in January in anticipation of the cutbacks.

Business investment plans have held up in recent months despite the uncertainty surrounding tax and spending policies. Core capital goods orders dipped 0.3 percent in December but posted strong gains of 3.3 percent in November and 3 percent in October.

The report suggests U.S. manufacturing is strengthening. The Institute for Supply Management said earlier this month that factory activity grew in January at the fastest pace in nine months. Measures of new orders and hiring both rose.

But industrial production fell in January after two months of increases, the Federal Reserve said. Much of the decline reflected a big drop in auto production that was likely temporary. The auto industry is coming off its best year for sales in five years. Sales continue to rise, so production will likely rebound in February.

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