Factory Orders Rose 1.1% in December

New orders at U.S. factories rose 1.1 percent in December, slightly ahead of forecast, as strong demand for machinery and durable goods offset weakness in civilian aircraft, a government report showed Friday.

Orders for durable goods, expensive items meant to last three years or longer, rose 1.8 percent in December, revised up from a 1.3 percent increase previously reported and overall factory orders for November were revised to a rise of 3.3 percent from a previously reported 2.5 percent gain.

December's climb was due in part to a 6.5 percent jump in machinery orders.

Wall Street analysts polled by Reuters had forecast a 1.0 percent factory orders rise.

New orders for the whole of 2005 increased by 8.1 percent over 2004, as did orders excluding transportation.

New orders for transportation equipment rose 1.9 percent as nondefense aircraft and parts orders slipped 8.0 percent, in a reversal from the thumping 139.4 percent increase the previous month. At the same time, defense aircraft and parts orders increased 31.0 percent and car and parts orders rose 6.7 percent.

When transportation orders were stripped out, factory orders were 0.9 percent higher in December. Excluding defense, orders rose 0.8 percent in the month, the report showed.

Meanwhile, orders for nondefense capital goods shrank 0.2 percent. But, stripped of aircraft, orders for nondefense capital goods — a proxy for business spending — jumped 4.1 percent.

The inventories-to-shipments ratio — a measure of how long it would take to deplete stocks at the current shipment pace — slimmed to 1.15 months' worth from 1.17 months in November.