- The Washington Times - Tuesday, February 4, 2003

WASHINGTON, Feb. 4 (UPI) — The Commerce Department said Tuesday that orders for manufactured goods rose 0.4 percent in December to $320.6 billion after falling 0.8 percent in November and rising 1.4 percent in October.

Economists on Wall Street were expecting new orders placed with U.S. factories to improve 0.3 percent during the month.

The report showed the gain was paced by more bookings for furniture, petroleum and computers.

For all of 2002 factory orders declined 0.8 percent after falling 7.4 percent in 2001, the government agency said.

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 prefers more moderate growth, which is less likely to cause inflationary pressures. By tracking economic data like factory orders, investors will know what the economic backdrop is for these markets and their portfolios.

The report shows how busy factories will be in coming months as manufacturers work to fill those orders.

This report provides insight to the demand for not only hard goods such as refrigerators and cars, but non-durables such as cigarettes and apparel. In addition to new orders, analysts monitor unfilled orders, an indicator of the backlog in production. Shipments reveal current sales. Inventories give a handle on the strength of current and future production.

All in all, this report 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 excluding transportation equipment, orders rose 0.9 percent after falling 0.7 percent in November.

Orders for non-durable goods, which include industrial chemicals, drugs, papers and textiles, rose 1.1 percent after easing 0.4 percent during the previous month.

Orders for petroleum products jumped 6.5 percent while bookings for clothing rose 1.8 percent.

New orders for durable goods, which account for more than half of the report, slipped 0.2 percent after dropping 1.5 percent in November. Orders for non-defense capital goods excluding aircraft fell 0.3 percent after dropping 3 percent in November.

Non-defense shipments, which economists consider a proxy for current business investment in computers and software, fell 1.3 percent following a 1.4 percent decline in November.

The report no longer includes orders for semiconductors after chipmakers stopped taking part in the voluntary government survey. Chips had accounted for as much as 4 percent of all durable goods orders.

Meanwhile, the Commerce Department said computer orders surged 25.3 percent, commercial aircraft orders jumped 22.2 percent and bookings for electrical equipment, appliances and components rose 0.4 percent.

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