Orders for goods meant to last several years rose in November, pointing to increases in spending and production that will help sustain the expansion into 2010.
Bookings minus demand for transportation equipment, which is often volatile, gained 2% last month, almost twice as much as forecast, figures from the Commerce Department showed today in Washington. A 33% slump in civilian aircraft limited the gain in total durable goods orders to 0.2%.
Companies such as 3M Co. are among those anticipating increases in spending on research and new products next year, which may help sustain growth and generate jobs. A record reduction in inventories over the first nine months of the year will also give factories reason to speed up assembly lines.
Fewer Americans than anticipated sought unemployment benefits last week, signaling employers are gaining the confidence to keep staff, figures from the Labor Department also showed today. Initial jobless claims fell by 28,000 to 452,000, the lowest level since September 2008.
Orders excluding transportation were projected to rise 1.1%, according to the Bloomberg survey median. Estimates for this ranged from increases of 0.3% to 3%.
Gains outside of transportation were broad-based, with increases in demand for machinery, metals, computers and communications gear.
Shipments of non-defense capital goods excluding aircraft, which is used in calculating gross domestic product, climbed 0.8% in November and October’s reading was revised to show a 1.5% jump, compared with a previously estimated 0.3% drop. Bookings for such goods, a proxy for future business spending, increased 2.9% in November.
The figures suggest business investment will contribute to growth. A report earlier this week from the Commerce Department showed the economy grew at a 2.2% annual pace, less than previously estimated.
Federal Reserve policy makers last week indicated the recovery is gaining strength and repeated a pledge to keep the benchmark interest rate low for an "extended period." They kept the overnight lending rate between banks in the range of zero and 0.25%, where it has been for a year.
Combined sales at manufacturers, wholesalers and retailers have been increasing since June, giving businesses the confidence to begin updating machinery.
Purchases of equipment and software increased at a 1.5% pace in the third quarter, the first gain since 2007, the Commerce Department reported this week.
Inventories of durable goods decreased 0.2%, today’s report showed.
The need to prevent stockpiles from falling much more will push factories to increase production, supporting economic growth in coming months. At the same time, exports are growing, which is also a boon for factories.
3M will increase capital expenditures next year by as much as 15% to about $1.05 billion U.S., Chief Executive Officer George Buckley said Dec. 22. The St. Paul, Minnesota-based company will spend as much as $100 million U.S. to research new products, part of which will be used to hire 60 to 80 employees with doctorates, he said.
3M trimmed about 6,400 jobs worldwide since last year and Buckley said he anticipates no large reductions in 2010 unless conditions change.
A decline in orders at Boeing Co., which are often volatile, limited last month’s advance in orders. The world’s second-biggest airplane maker said it received bookings for nine aircraft in November, down from 14 the previous month and 20 in September.
