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Factory orders surge
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January 5, 2000: 11:19 a.m. ET
November orders rise 1.2%, more than expected, suggesting strong demand
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NEW YORK (CNNfn) - Orders placed with U.S. manufacturers rose for the first time in three months in November, a report released Wednesday showed, suggesting demand for American-made goods remained robust in the final months of last year.
Orders at the nation’s factories jumped 1.2 percent, the Commerce Department said, above the 0.9 percent gain economists had expected and the flat results registered the month before. October’s orders were originally reported as a 0.2 percent drop. November marked the first monthly gain since a 1.3 percent increase in August.
Inventory building ahead of Y2K and the seasonal holidays partially contributed to the upswing in orders, analysts and economists said. At the same time, strengthening demand abroad for American made goods -- particularly from the Far East -- suggests fourth-quarter economic growth will ring in at a strong pace, perhaps in the 5 percent range.
"Although there has been substantial volatility in the monthly orders figures, the longer-term trend is clearly higher,” said Steven Wood, an economist with Banc of America Securities in San Francisco. "This reflects still solid domestic demand, inventory building, and improving foreign demand as international economic activity accelerates.”
More rate concerns
While considered by most analysts and investors to be a volatile indicator, the number suggested to many investors that the economy is growing at a strong enough pace to prompt the Federal Reserve to raise interest rates next month.
"With the manufacturing sector clearly recovering -- and only modest deceleration in consumer spending -- the Fed will be prompted to lift interest rates at its Feb. 2 meeting,” Wood said. Fed officials gather in Washington Feb. 1-2 to discuss the economy and monetary policy.
Bonds, which are particularly sensitive to hints of economic growth and accelerating inflation, extended losses following the report’s release. The benchmark 30-year bond fell 13/32 of a point in price, boosting its yield to 6.57 percent.
On a year-over-year basis, factory orders gained 8.5 percent, reflecting renewed demand for U.S. goods over the past year, particularly from Asia and Eastern Europe. The manufacturing sector has been gradually emerging from a slump during 1997 and 1998 caused by weakness in Asia and other overseas economies.
Durable orders rise
Orders for durable goods -- which includes items such as cars and appliances meant to last at least three years -- rose 0.9 percent in November after posting a 0.9 percent drop in October. Orders for electronics and other electrical goods jumped 8.4 percent after registering a 7.4 percent decline the month before. Orders for short-lasting non-durable goods posted a 1.6 percent gain after a 1.1 percent rise in October.
Gains were seen almost completely across the board, with few areas of decline. Notable among the declining groups were orders for transportation equipment, which dropped 3.5 percent, and orders for office equipment, which fell 6.5 percent.
Separately, the National Association of Purchasing Management said its index of non-manufacturing activity was unchanged in December from November at 55.5. A reading above 50 suggests activity is still on the upswing, while a reading below 50 indicates contraction. 
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