- The Washington Times - Thursday, February 27, 2003

WASHINGTON, Feb. 27 (UPI) — The Commerce Department said Thursday that new orders for big ticket items jumped 3.3 percent in January — their largest monthly gain since July and after falling 0.4 percent in December and 1.2 percent in November.

Most economists on Wall Street were expecting orders for durable goods, or items meant to last three years or longer, to improve 1 percent during the month.

The government agency said new orders were boosted by a sharp rise in transportation-related orders.

Durable goods orders reflect the new orders placed with domestic manufacturers for immediate and future delivery of factory hardgoods.

Investors watch the report to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform.

The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market doesn't mind growth but is extremely sensitive to whether the economy is growing too quickly and paving the road for inflation. By tracking economic data like durable goods orders, investors will know what the economic backdrop is for these markets and their portfolios.

Orders for durable goods show how busy factories will be in the months to come, as manufacturers work to fill those orders. The data not only provides insight to demand for things like refrigerators and cars, but also business investment going forward.

The report no longer includes orders for semiconductors because some chipmakers have stopped taking part in the voluntary survey.

If companies commit to spending more on equipment and other capital, they are obviously experiencing sustainable growth in their business. Increased expenditures on investment goods sets the stage for greater productive capacity in the country and reduces the prospects for inflation. That tells investors what to expect from the manufacturing sector, a major component of the economy and therefore a major influence on their investments.

The latest report from the Commerce Department showed orders for durable goods excluding transportation equipment rose 2.5 percent after rising 1.1 percent in December.

Orders for non-defense capital goods excluding aircraft, a proxy for future investment, jumped 5.4 percent after slipping 0.1 percent in December.

Shipments, which the government uses to help construct quarterly gross domestic product measures, climbed 4.1 percent after falling 1.4 percent a month earlier.

The Commerce Department said inventories of durable goods slipped 0.1 percent after rising 0.9 percent in December.

Bookings for commercial aircraft and parts fell 19.8 percent after surging 21.4 percent a month earlier and orders for electrical equipment, appliances and components rose 0.8 percent after falling 0.9 percent a month earlier.

Orders for motor vehicles and parts jumped 10.7 percent after falling 6 percent in December while orders for computers and electronic products rose 3.2 percent after rising 3.92 percent a month earlier.

The report also showed communications equipment orders surged 46.1 percent after dropping 21.2 percent in December and government spending for defense equipment declined 2.3 percent after surging 39 percent in a month earlier.

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