Factory Orders Better Than Expected

WASHINGTON – U.S. factory orders (search) rose at the fastest rate in four months during November as strong demand for new commercial aircraft pushed business up by 1.2 percent to a seasonally adjusted $377.42 billion, the Commerce Department said on Tuesday.

The November increase followed an upwardly revised 0.9 percent orders gain in October that previously was reported as a 0.5 percent rise and outstripped Wall Street economists' forecasts for a smaller 0.8 percent pickup.

The data added to other signs that the nation's industrial sector wrapped up 2004 on a relatively healthy note, including the Institute for Supply Management's (search) report on Monday showing its index of manufacturing activity moved higher in December.

While overall orders rose, demand was mixed within its components. Machinery orders fell 5.1 percent to $25.60 billion but computers orders were up 6.4 percent to $6.06 billion.

The Commerce Department (search) said transportation orders -- the largest single component in factory business -- posted an 8.8 percent increase in November following a scant 0.1 percent October gain.

It was the strongest rise in transportation orders since an 11 percent gain in February. Civilian aircraft and parts orders -- which tend to come in large dollar totals but on an irregular basis because aircraft are so expensive -- shot up by 64.2 percent to $9.59 billion after a slim 5 percent October advance.

Excluding transportation, factory orders were flat in November after rising 1 percent in October.

There was scant market reaction to the factory orders data, though analysts said it was generally positive.

Economist Gary Thayer of A.G. Edwards & Sons in St. Louis, Mo., said the economy appeared to be "still doing quite well" and that businesses seemed optimistic about the future.

"Orders have continued to trend upward, not quite as fast as they were a year ago but continuing to rise," Thayer noted.

The factory orders report showed shipments of finished goods, a gauge of how busy factories are at the moment, grew by 0.4 percent to $379.03 billion in November on top of a stronger 1.6 percent increase in October.