Ahead of the Bell: Factory Orders

posted: 6 DAYS 3 HOURS AGO

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WASHINGTON -Factory orders likely rose moderately in December, providing more evidence that the manufacturing sector is supporting the economic recovery.

Economists surveyed by Thomson Reuters expect factory orders posted a 0.5 percent increase in December following a 0.6 percent rise in November. The Commerce Department is scheduled to release the new report at 10 a.m. EST Thursday.

If the report comes in as forecast, it would be the fourth consecutive month of increases.

The government reported two weeks ago that orders for durable goods, items expected to last at least three years, increased a smaller-than-expected 0.3 percent in December. Thursday's report will revise the preliminary look at demand for durable goods and add orders for nondurable goods, items such as chemicals, paper and food.

Economists are hoping the manufacturing sector is beginning to rebound as the economy struggles to emerge from the worst recession since the 1930s. The sector has become a pocket of strength, though some of it flows from temporary factors such as customers needing to add to depleted stockpiles of goods.

Manufacturing activity grew in January to its strongest point since 2004. The Institute for Supply Management said Monday its manufacturing index read 58.4 in January, compared with 54.9 in December. It was the sixth straight month of expansion.

As their customers try to restock their shelves, manufacturers need to ramp up production to match their demands. That could mean hiring more workers, which would help invigorate the economic rebound.

The nation's gross domestic product, the broadest measure of the economy's output, grew by 5.7 percent in the fourth quarter of last year, the second straight quarter of growth. The economy grew at a 2.2 percent rate in the third quarter after a record four straight quarters of decline.

2010-02-04 06:20:24