Factory Shipments Up Strongly in December
U.S. manufacturers’ shipments rose and inventories fell in December, the government said Thursday, and analysts say there are enough orders on hand to keep factories busy for months to come.
Factory orders rose 1.2% in December when the volatile category of aircraft and parts is excluded, the strongest rise since April, the Commerce Department said. That followed a 0.6% decline in November, Commerce Department figures showed. Shipments rose for the first time since September.
Manufacturers’ inventories also declined in December for the first time in a year, a sign that factories aren’t saddled with warehouses full of unsold goods.
Coupled with reports released Thursday from U.S. retailers showing stronger-than-expected sales in January, “you have a very healthy picture here,” said William Sullivan, an economist at Morgan Stanley Dean Witter in New York.
As U.S. businesses are expecting a decline in export orders from Asia, “we entered 1998 with lean inventories,” Sullivan said. “There simply is no overhang.”
U.S. retailers’ same-store sales rose a greater-than-expected 5.9% in January, boosted by specialty clothing stores that had major post-holiday clearance promotions.
Overall factory orders, including aircraft, fell 2.5% in December after rising 2.4% the month earlier. Still, analysts said a one-month falloff in aircraft orders isn’t a serious concern because Boeing Co., the nation’s largest maker of jetliners, is working feverishly to deal with a three-year backlog in demand.
While factory orders fell, shipments of finished products rose 1.3% in December after falling 0.3% in November.
Despite the drop in orders, 1997 was a strong year for manufacturing. Last year, factory orders rose 5.3%, stronger than the 4.6% increase of 1996 but more modest than the 7.4% jump of 1995.
Meanwhile, separate reports on unemployment Thursday pointed to divergent job-market trends.
The Labor Department said new claims for unemployment benefits edged up to 303,000 in the last week of January from 300,000 a week earlier, though claims remained low enough to indicate the job market was still tight, economists said.
But another report said job cuts by U.S. companies soared to the highest level in two years in January, in part because of the economic turmoil in Asia.
The volume of job cuts announced last month jumped to 72,193, up 24% from December’s total of 58,293, according to the outplacement firm Challenger, Gray & Christmas Inc. It was the highest since 97,379 in January 1996, the firm said.
The government is due to issue its widely watched January employment report today.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Factory Orders
New orders, in billions of dollars, seasonally adjusted: Dec.: $336.2
Source: Commerce Department
