WASHINGTON – Orders to U.S. factories posted the biggest gain in three months in November but the strength was concentrated in a surge in demand for commercial aircraft.
The Commerce Department reported Wednesday that orders to factories rose by 2.5 percent in November to a record-high of $407.7 billion. It was the best percentage gain since a 2.9 percent rise in August and followed a 1.7 percent October increase.
However, the report was heavily influenced by a surge in demand for commercial aircraft, which shot up by 134.3 percent. Outside of all transportation categories, orders were essentially unchanged, the fourth month out of the past five that this broad category has either fallen or shown no growth.
Economists are looking for a slowdown in manufacturing growth in coming months as companies catch up on an order backlog caused by the Gulf Coast hurricanes.
They believe that manufacturing will also be held back by weakness in the auto industry, where industry giants General Motors (GM) and Ford (F) are fighting a slowdown in sales following a summer-surge that reflected use of attractive incentive offers to lure consumers into showrooms.
On Tuesday, the Institute for Supply Management's closely watched gauge of manufacturing activity came in at an unexpectedly weak 54.2 for December. It was the lowest reading in seven months, indicating that manufacturing activity was slowing as 2005 drew to a close.
The 2.5 percent rise in factory orders in November reflected a 4.4 percent jump in demand for durable goods, the best showing in six months and unchanged from a preliminary estimate made on Dec. 23. Orders for nondurable goods, items such as petroleum, clothing and food, rose by 0.4 percent following a 0.1 percent October gain.
The demand for durable goods, items expected to last at least three years, was led by the surge in demand for commercial aircraft, reflecting the success that aircraft-maker Boeing Co. had at the Dubai air show. For November, Boeing (BA) booked 148 new plane orders compared to 36 orders in October.
Overall, transportation orders were up a smaller 15.8 percent as demand for motor vehicles and parts fell by 7.8 percent, the second straight decline in this category, reflecting the problems automakers are having with slowing sales.