- The Washington Times - Tuesday, January 28, 2003

WASHINGTON, Jan. 28 (UPI) — The Commerce Department said Tuesday that new orders for big-ticket items rose 0.2 percent in December to $170.1 billion after falling 1.3 percent in November.

Economists on Wall Street were expecting orders for durable goods — items meant to last at least three years — to improve 0.8 percent during the month.

"Today's durable goods report is further evidence that the manufacturing sector is flat in the water," said Thomas J. Duesterberg, president and chief executive officer of the Manufacturers Alliance/MAPI.

"Although the fundamentals are positive, it will take a resolution of the international situation and positive momentum on the president's economic recovery plan to bolster confidence and achieve sustained growth," he added.

For all of 2002, the government agency said new orders fell 0.2 percent after dropping 11.6 percent in 2001.

Durable goods orders reflect the new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods. By tracking economic data such as 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 provide insight to demand for things such as refrigerators and cars, but also business investment going forward.

If companies commit to spending more on equipment and other capital, they are 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 1.1 percent in December after falling 2 percent during the previous month.

Orders for non-defense capital goods excluding aircraft, a proxy for future investment, slipped 0.1 percent in December.

Shipments, which the government uses to help construct quarterly gross domestic product measures, fell 0.9 percent after falling 1.3 percent in November.

The Commerce Department said inventories of durable goods rose 0.9 percent while shipments fell 1.5 percent during the month.

Bookings for commercial aircraft and parts surged 21.4 percent after jumping 22.1 percent a month earlier.

Machinery orders rose 0.5 percent after dropping 2.7 percent in November. Orders for computers and electronic products rose 3.2 percent after declining 1.4 percent.

The report also showed communications equipment orders sank 21.2 percent but government spending for defense equipment surged 17.4 percent after jumping 34.2 percent in November.




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