US factory orders up 2.7 per cent in October
Posted December 6, 2016 7:21 am.
Last Updated December 6, 2016 8:00 am.
This article is more than 5 years old.
WASHINGTON – Orders to U.S. factories rose in October by the largest amount in 16 months but a key category that tracks business investment posted an anemic gain.
Factory orders increased 2.7 per cent in October, the best showing since a 2.9 per cent rise in June 2015, the Commerce Department said Tuesday. The strength came from a 93.8 per cent surge in the volatile category of commercial aircraft. A category that serves as a proxy for business investment edged up just 0.2 per cent following a 1.5 per cent drop in September.
U.S. manufacturers have struggled for much of this year, having to deal with the impact of a strong dollar, which makes their exports more expensive in overseas markets, and big cutbacks in investment spending by energy companies in the wake of falling oil prices.
Orders for durable goods, items expected to last at least three years, rose 4.6 per cent, slightly lower than an advance report which had put the gain at 4.8 per cent. Orders for nondurable goods such as chemicals, food and paper were up 0.9 per cent in October, matching the September increase.
So far this year, orders for nondefense capital goods excluding aircraft – the category used to track business investment – are down 4 per cent from the same period in 2015. This weakness in investment has held back overall growth this year.
Economists are forecasting that manufacturing may start seeing better days with energy prices now rising again.
The Institute for Supply Management reported that American factories expanded for the third straight month in November as new orders and production grew at a faster pace.
Stronger output in manufacturing would help support overall economic growth. The U.S. economy grew at an annual rate of 3.2 per cent in the third quarter, helped by a rebound in inventory restocking. That was up significantly from weak gains of 0.8 per cent in the first quarter and 1.4 per cent in the second quarter.
Analysts expect the economy will expand at a 2 per cent rate in the current quarter.
