Manufacturers’ orders for durable goods went up in December for the fourth month in a row, signaling solid growth in the U.S. manufacturing sector. According to the U.S. Department of Commerce, new orders rose 4.6 percent or $10 billion for a total of $230.7 billion for the month of December.
Bloomberg noted that this was “the first four-month gain in demand for durable goods since comparable records began in 1992.” Durable goods are goods built to last for at least three years. They help increase the production capacity of manufacturers, making more goods available to consumers in the future.
Some economists expected durable goods orders to stop increasing in December due to the fiscal cliff talks in Washington. Bloomberg surveyed 76 economists and found that they predicted a median 2 percent increase in orders. The highest estimate in the entire survey, 4.5 percent, was not as high as the actual 4.6 percent increase in December. Jonathan Basile, an economist for Credit Suisse, said, “It looks to us that ‘fiscal cliff’ concerns, at least on the surface, are not showing up in broader manufacturing activity. . . . It was more fear than reality.”
One of the reasons for the growth in durable goods orders may have been the rise in defense spending. The Commerce Department said there was a 56.4 percent increase in military aircraft orders, for example. Economists at Wells Fargo explained that some manufacturing companies in the United States spent money on additional orders in December to save money before a year-end tax was set to expire.
The rise in durable goods spending in the last four months of 2012 is good news for the U.S. economy, but business leaders are cautious about the overall economic recovery. Doug Oberhelman, CEO of the equipment giant Caterpillar, said in a statement, “We’re encouraged by recent improvements in economic indicators, but remain cautious.” Caterpillar’s fourth-quarter profits exceeded expectations. General Electric’s fourth-quarter profits also fared very well. GE CEO Jeffry Immelt claimed that his company entered the new year strong because of “solid order growth in five of the six businesses.”
[cf]tracking[/cf]
No Comment