U.S. Durable Goods Orders Rise 3.1%

Rise in automobile orders was largest since August 2004.

Orders for U.S. durable goods rose 3.1% in December as transportation equipment orders remained robust, the Commerce Department said Jan. 26. Orders rose 7% for all 2006, down from an 8.6% gain for 2005, the government report showed.

The rise in automobile orders was the biggest since August 2004. Transportation equipment orders rose 4.8% last month.

Excluding the volatile transport sector, durable goods orders in December were up 2.3%. Orders excluding the defense sector increased 3.9%.

Commercial aircraft orders meanwhile rose 26.5% in December, after rising 3.8% in November. Orders for military aircraft spiked 20.5% in December after rocketing 47.7% in November.

"The 3.1% increase in new orders for durable goods and 2.4% increase in non-defense capital goods, excluding aircraft, in December is a positive sign that the manufacturing slump is a pause, not a recession, and is starting to turning around," said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI.

"With manufacturing capacity utilization above 80% and the unemployment rate at only 4.5%, the economy is experiencing constraints that require machinery and other capital goods to alleviate. It is the big-ticket consumer items like housing and autos which are weighing down the industrial sectors. Sorting out the excesses in the downstream housing and auto-related products is taking time but it appears that the strength in consumer income growth and the positive capital spending cycle will save the day," Meckstroth said.

Sources, Agence France-Presse, IndustryWeek Staff

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