- The Washington Times - Wednesday, February 4, 2004

ASSOCIATED PRESS

America’s factories saw orders rebound in December, rising by a strong 1.1 percent, a fresh sign that the economy’s recovery was in full stride as it headed into a new year.

The over-the-month increase reported by the Commerce Department yesterday came after orders placed with factories dropped by 0.9 percent in November. The latest snapshot of manufacturing activity was better than economists were expecting. They were forecasting a modest 0.3 percent rise in orders for December.

Much of the strength in December reflected stronger demand for “nondurable” goods, such as food and apparel.

After keeping their inventories lean, “businesses are now having to restock everything from clothing and apparel to toothpaste, diapers and prescription and nonprescription medicines,” said Mark Vitner, economist at Wachovia.

That restocking, he said, bodes well for economic growth in the current quarter, which some analysts predict will exceed a 4 percent annual rate.

For all of 2003, orders to U.S. factories rose by 3.9 percent — the best showing since 2000, when the economy was still showing record expansion — and a big improvement from the 1.9 percent decline registered in 2002.

Yesterday’s report, along with other recent economic data, suggest that the nation’s manufacturing sector is gaining some ground — good news for the sector’s own recovery as well as for the U.S. economy’s continued health.

A more forward-looking report released Monday by the Institute for Supply Management said that manufacturing activity was robust in January.

Still, job creation in the sector remains weak.

Factories have lost 2.8 million jobs since July 2000, the month manufacturing employment peaked in the last expansion. The nation’s manufacturers were hardest hit by the 2001 recession and have struggled since then to get back on firm footing.

But recent economic data suggest that demand at home and abroad for U.S. manufactured goods is getting stronger.

A weaker dollar and stronger demand from other countries, whose economies are improving, have been helping U.S. exports in recent months. A weaker dollar makes U.S. goods less expensive, thus more competitive on global markets.

The 1.1 percent increase in overall factory orders in December was the largest rise since October, when orders went up by 2.4 percent.

Orders for nondurable goods rose by 2 percent in December, on top of a 0.8 percent increase in November. Orders placed with factories for food, clothing, leather goods, petroleum and coal products, and plastic products all showed gains.

Orders for “durable” goods — costly manufactured products expected to last at least three years — rose by 0.3 percent in December, an improvement from November’s 2.4 percent decline. Stronger demand for machinery and electrical equipment were among the categories posting an increase in orders, while orders for cars and furniture were among categories in which orders declined.

Excluding transportation equipment, which swings widely from month to month, all other orders to factories rose by 0.9 percent in December, a turnaround from the 1.1 percent drop seen in November.

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