December Factory Orders Strong

Orders to U.S. factories for durable goods, helped by strong demand for communications equipment, rose a solid 0.6 percent in December, capping off a year in which demand for big-ticket manufactured goods rose at the fastest clip in a decade.

The Commerce Department (search) report Thursday provided further evidence that the country's manufacturing companies were finally beginning to recover from the battering they received during the 2001 recession and a subsequent weak recovery, a period which has seen the loss of 2.7 million manufacturing jobs.

For all of 2004, orders to U.S. companies for big-ticket durable goods (search) were up 10.9 percent, the best showing since 1994. It was a sharp turnaround from the past three years in which orders plunged 10.6 percent in 2001. They were down 1.9 percent in 2002 and posted a modest 3.3 percent rebound in 2003.

The 0.6 percent increase in orders in December, which was just slightly below economists' expectations, followed an even stronger 1.8 percent rise in November.

Excluding the volatile transportation sector, new orders were up an even stronger 2.1 percent in December following two straight months of declines. It marked the best showing for orders outside of transportation since a 2.8 percent jump in September.

In a second report, the Labor Department (search) said 325,000 newly unemployed Americans filed claims for unemployment benefits last week, an increase of 7,000 from the previous week. The slight gain followed the biggest drop in jobless claims in more than three years the previous week.

The 0.6 percent increase in December orders reflected a 17.8 percent jump in demand for communications equipment, the biggest jump for any single category, and reflected a rebound after a 39.9 percent decline in November.

Orders for all computer and electronic products were up 6.4 percent in December after having fallen 5.7 percent in November.

Orders for transportation equipment fell 3 percent in December after rising by 9.3 percent in November. The weakness last month reflected a weakness in demand for both commercial and military aircraft. Orders for motor vehicles and parts were up 4.6 percent last month after a 2.4 percent increase in November.

Excluding demand for all defense products, orders were up 1.2 percent in December following a 4.1 percent rise in November.

Orders for all durable goods totaled $200.3 billion in December after adjusting for normal seasonal variations.