Washington, Dec. 4 (Bloomberg) -- Orders placed with U.S. factories in October rose for the first time in three months as bookings for autos, computers and electronics increased, government figures showed. Factory orders rose 1.5 percent for the month to $322.6 billion following a revised 2.4 percent decline in September, the Commerce Department said. Excluding transportation equipment, orders increased 1.1 percent after rising 0.2 percent. The rebound in orders may be short-lived as an industry survey released earlier this week showed new bookings declined in November. Orders are falling at companies such as Applied Materials Inc. because customers are scaling back amid feeble demand. That may keep the nation's factories, which represent one- seventh of the economy, from spurring the recovery, economists said.
``The rise was a welcome development, but in no way is this a referendum for a sharp resurgence in manufacturing,'' said William Sullivan, senior economist at Morgan Stanley in Jersey City, New Jersey. ``It suggests continued caution among businesses.'' Economists expected factory orders to rise 1.7 percent to $323.5 billion after the previously reported 2.3 percent fall for September, based on the median of 57 forecasts in a Bloomberg News survey. The October rise in orders was led by a 2.4 percent jump in bookings for durable goods, which account for more than half of the report. Orders for computers and electronics increased 2.5 percent and transportation equipment, which includes motor vehicles and parts, gained 4.2 percent. Bookings for machinery rose 3.3 percent. The government statistics no longer include orders for semiconductors after chipmakers stopped taking part in the voluntary government survey.
Novellus Systems Orders
Novellus Systems Inc., whose equipment builds circuits in semiconductors, last week said it will meet its fourth-quarter forecast and orders may be better than expected. Orders from customers, a key measure for investors, will be $200 million to $210 million, said Richard Hill, the company's chief executive, in a conference call with investors. In October, he said fourth- quarter bookings would be about $200 million and could be as little as $180 million. At the same time, some companies aren't faring as well. Applied Materials last month cut sales forecasts for this quarter as chipmakers reduce orders for new machines. Sales and orders will drop 20 percent from the previous three months and the company will have a ``small loss,'' Applied said. Customers including Intel Corp. reduced capital spending plans as they pared holiday sales forecasts for computers and electronics.
Lower November Orders
A separate report issued Monday showed that new orders slipped in November. The Institute for Supply Management's index of new orders dropped to 49.9 last month from 50.9 in October, the group's survey showed. It takes a sustained reading greater than 50.8 in the order index for gains to show up in the government's factory order report, according to the group. The reading has been below that for four of the past five months. ``Although the broader economy is still expanding, healthy economic growth will not return until the manufacturing sector is, at least, expanding moderately,'' said Steve Wood, chief economist at FinancialOxygen Inc. in Walnut Creek, California. The economy is probably growing at a 1.6 percent annual rate this quarter, down from 4 percent in the previous three months, according to last month's consensus estimate of economists surveyed by Blue Chip Economic Indicators. Today's report also showed orders for non-defense capital goods excluding aircraft rose 5.5 percent in October after falling 4.3 percent the previous month. Orders for defense capital goods plunged 30.8 percent, the biggest decline in six months, after rising 7.2 percent in September. Shipments, which economists consider a proxy for current business investment in equipment and software, rose 1 percent following a 0.3 percent decline in September. Orders for non-durable goods, which include industrial chemicals, drugs, papers and textiles, rose 0.6 percent in October after increasing 0.3 percent the prior month. Factory inventories were unchanged in October following a 0.2 percent gain. The inventory-to-shipments ratio fell to 1.32 months, from 1.33 months in September. //www.quote.bloomberg.com