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Orders Increase At U.S. Factories

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By MARTIN CRUTSINGER, The Associated Press

Published: January 4, 2008

WASHINGTON - Orders to U.S. factories jumped in November by the largest amount in four months. The increase was driven by higher petroleum prices and was not viewed as a sign of any newfound strength in manufacturing.

The Commerce Department reported Thursday that orders for manufactured goods rose by 1.5 percent in November, the biggest rise since a 3.4 percent surge in July.

But all the strength came in demand for nondurable goods, which shot up 3 percent, reflecting higher oil prices. Orders for durable goods, everything from appliances to autos, actually fell by 0.1 percent, the fourth straight monthly decline.

Analysts said the drop in durable goods reflected the problems facing factories right now. On Wednesday, the Institute for Supply Management reported that its closely watched manufacturing gauge plunged to 47.7 in December, the lowest reading since the spring of 2003 when business confidence was hurt by uncertainties surrounding the invasion of Iraq. Any reading below 50 is a sign that manufacturing is contracting.

The Labor Department reported that the number of newly laid off workers filing applications for unemployment benefits totaled 336,000 last week, a drop of 21,000 from the previous week. While the decline was more than double what had been expected, analysts said the improvement was skewed by the fact that many state claims offices were closed for part of last week for the Christmas holidays, giving laid off workers less time to file claims.
Private businesses added a modest 40,000 jobs to their payrolls in December, according to a separate report by payroll giant Automatic Data Processing and forecasting firm Macroeconomic Advisers.

Economists said this supported their view that the unemployment rate probably ticked up from 4.7 percent in November to 4.8 percent in December, with total payroll jobs - both private companies and government - growing by around 70,000. The government will release this report on Friday.

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