THE ECONOMY : Manufacturing Jumps 2.6% in November on Aircraft, Autos

From Associated Press

U.S. manufacturing was strong late last year as demand for aircraft and autos led a surge in factory orders.

The Commerce Department reported Thursday that orders to factories rose 2.6% in November, the biggest jump in three months and a rebound from a rare decline in October.

While the advance was paced by civilian aircraft and cars, there were increases practically across the board. A slump in clothing orders--believed to be due in part to unusually warm fall weather--was one of the few signs of weakness.

“It looks very strong. The increases in new orders are widespread,” said economist Lynn Reaser of First Interstate Bancorp in Los Angeles. She said the momentum will probably ease in coming months as the full impact of rising interest rates is felt and consumer demand slows.


The Federal Reserve Board has raised interest rates six times since February to slow the pace of growth, and analysts predict another boost at the end of this month.

The November increase in factory orders-- the 13th in the past 16 months-- was the largest since a 4.7% rise in August. Orders declined 0.4% in October, the first drop since July.

Analysts were surprised by the size of November’s advance, particularly a 1.7% increase for non-durable goods such as food and fuel. Among non-durables, only tobacco and clothing products posted declines.

In another report, the Labor Department said the number of Americans filing new claims for state unemployment benefits reached the highest level in nearly six months last week. The increase of 14,000 to a seasonally adjusted 335,000 was a seasonal quirk, analysts said.


In the factory report, the Commerce Department said that-- excluding the volatile transportation component-- orders rose 1.2% in November. That indicator was up 1% the previous month and has risen 17 times in the past 18 months.

Orders for durable goods, items expected to last more than three years, were up 3.4%, after slipping 0.8% in October. Transportation equipment, a major component of durable goods, soared 12.7%.

Orders for all goods totaled a seasonally adjusted $293.4 billion, up from $286 billion in October. For the first 11 months of last year, orders were 10% higher than for the year-earlier period.

Shipments, a measure of current production, increased 2.3% to $290.4 billion in November, the first gain since August. Shipments fell 0.8% in October.


The backlog of unfilled orders rose 0.7% in November, the third straight advance, to $454.9 billion after gaining 0.4% the previous month. The orders backlog is often seen as a measure of whether current facilities and manpower are able to keep up with demand.

Inventories in November rose 0.5% to $390 billion, after a 0.4% decrease in October.

But orders for non-defense capital goods excluding aircraft fell 1% in November after rising 0.8% in October. Analysts consider declines in this category as signals to manufacturers that there is no need to expand.



Factory Orders

Total new orders, in billions of dollars, seasonally adjusted:

Nov. 1994: $293.4

Source: Commerce Department