Data Deepen Concerns About Manufacturing
Hefty orders for U.S. aircraft buoyed otherwise weak factory orders in November, a report showed Wednesday, the second in as many days to raise concerns about U.S. manufacturing.
Separate data showed mortgage applications fell for the fourth straight week as the housing market gave further signs of slowing after a five-year boom.
New orders at U.S. factories rose 2.5% in November, in line with forecasts. But when transportation orders were stripped out, factory orders were unchanged from the previous month, a Commerce Department report showed. Orders for cars and machinery dropped.
“The factory orders report shows that the first two months of the fourth quarter were not especially a great time for manufacturers,” said Lehman Bros. economist Drew Matus.
“This is the second signal we’ve gotten that not all is well in the manufacturing sector of the economy,” he said, noting that the Institute for Supply Management said its index of national factory activity, released Tuesday, was below expectations. The index fell to 54.2 in December from 58.1 in November and was short of economists’ median forecast for an easing to 57.5.
Gains in factory orders were propelled by a 15.8% rise in transportation equipment, led by a 134.3% surge in nondefense aircraft and parts orders.
The increase in civilian aircraft orders is largely reflective of a record year for orders at Boeing Co., the top U.S. aircraft maker. Principally thanks to big orders from Asia and the Middle East, Boeing had booked 870 plane orders through late December and was on pace to recapture the top spot globally from European arch rival Airbus. Boeing will report final figures for 2005 today.
At the same time, defense aircraft and parts orders slid 42.9% and car and parts orders fell 7.8%, the weakest reading for auto orders since December 2002, when orders tumbled 11.4%.
General Motors Corp., Ford Motor Co. and DaimlerChrysler’s Chrysler division reported weak auto sales in December as consumers sought smaller, more fuel-efficient cars and U.S. automakers lost ground to Asian rivals, according to data released Wednesday.
Similarly, orders for nondefense capital goods climbed 19.6%, a record increase, based on aircraft orders. But when aircraft orders were stripped out, nondefense capital goods -- a proxy for business spending -- fell 2.1%.
Orders for durable goods, which are expensive items meant to last three years or longer, rose 4.4% in November, unrevised from a report Dec. 23.
The inventories-to-shipments ratio -- a measure of how long it would take to deplete stocks at the current shipment pace -- was steady at a low 1.18 months’ worth.
Mortgage applications fell in the week ended Dec. 30 despite a rebound in refinancing activity, the Mortgage Bankers Assn. said. Volume was at its lowest level since June 2004.
