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Encouraging Sign: Factory Orders Rise 1.2%

By John S. McClenahen Prior to Feb. 5's release of the most recent data, the consensus among economists was that U.S. factory orders would rise 1% in December 2001. They actually did a little better, up 1.2% from November to $322.2 billion, reports the U.S. Commerce Department's Bureau of the Census. David Huether, chief economist at the National Assn. of Manufacturers, Washington, takes this as a sign that the decline of U.S. manufacturing may be ending. "While I would not bet the house on a manufacturing recovery in the first [calendar] quarter [of 2002], the odds are clearly moving in that direction," he says. "Since we are in an investment-led recession, the outlook for durable goods is a reliable indicator of the path of recovery. [And] with this in mind, the board-based gains [in December] in durable goods orders -- with increases registered in fabricated metals, machinery, computers and transportation equipment -- hint that the year-long decline in business investment may be over," Huether states. "Better yet, the 1.7% increase in durable orders was only revised slightly downward from the previously published 2% increase for December," he adds.

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