- The Washington Times - Thursday, March 6, 2003

WASHINGTON, March 6 (UPI) — The Commerce Department said Thursday that orders for manufactured goods jumped 2.1 percent in January to $327.1 billion — their highest level in 20 months.

Most economists on Wall Street were expecting new orders placed with U.S. factories to rise 1.9 percent during the month after rising 0.3 percent in December and falling 0.8 percent in November..

The report showed the gain was paced by a 14.6 percent gain in orders for autos and auto parts.

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 nondurables 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 1.5 percent after rising 0.9 percent in December.

Orders for non-durable goods, which include industrial chemicals, drugs, papers and textiles, rose 1.2 percent after rising 1.1 percent during the previous month.

Orders for petroleum products rose 5.1 percent after jumping 6.5 percent a month earlier.

New orders for durable goods, which account for more than half of the report, rose 2.9 percent after slipping 0.2 percent in December. Orders for non-defense capital goods excluding aircraft jumped 4.5 percent after falling 0.3 percent a month earlier.

Non-defense shipments, which economists consider a proxy for current business investment in computers and software, rose 4.5 percent after falling 0.6 percent in December.

Shipments of capital goods, which are used in calculating gross domestic product, rose 3.2 percent after declining 1.3 percent a month earlier.

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.

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