28 January 2003, 17:21  U.S. Dec. Durables Orders Rise 0.2%; Ex-Trans. 1.1%

Washington, Jan. 28 (Bloomberg) -- U.S. orders for durable goods rose less than expected in December, held back by reduced bookings for motor vehicles, communications equipment and fabricated metals, a government report showed. Orders for equipment ranging from lathes to computers to aircraft rose 0.2 percent to $170.1 billion, the Commerce Department said, after falling a revised 1.3 percent in November. Economists surveyed by Bloomberg News had expected a 0.8 percent increase. Bookings for capital equipment declined. The rise closed a year of stagnation in business investment that has held back the recovery. Federal Reserve Chairman Alan Greenspan said last month that a more vigorous rebound would require a sustained increase in capital spending. The economy's growth in the fourth quarter probably slowed to a 0.9 percent annual rate from 4 percent in the third quarter, a Bloomberg survey of economists found.
The statistics ``are very far away from suggesting a robust business investment expansion,'' said Ian Morris, chief economist of HSBC Securities USA Inc. in New York. ``It's more stagnation instead.'' Today's report showed that orders for durable goods excluding transportation equipment jumped 1.1 percent last month after dropping 2 percent the previous month. Economists surveyed by Bloomberg News expected those orders to increase 0.7 percent after an initially reported 1.3 percent drop for November. For the year, orders fell 0.2 percent. Orders dropped 11.6 percent in 2001.
Non-Defense Capital Goods
Orders for non-defense capital goods excluding aircraft, a proxy for future investment, declined 0.1 percent in December. Shipments, which the government uses to help construct quarterly gross domestic product measures, fell 0.9 percent after declining 1.3 percent. Inventories of durable goods rose 0.9 percent last month, the first increase since January 2001, today's report showed. Shipments fell 1.5 percent. The report no longer includes semiconductors because chipmakers such as Intel Corp. have stopped participating in the survey. Bookings for commercial aircraft and parts jumped 21.4 percent after gaining 22.1 percent a month earlier. Machinery orders gained 0.5 percent last month after dropping 2.7 percent in November, the Commerce Department report showed. Orders for computers and electronic products rose 3.2 percent after declining 1.4 percent. Communications equipment orders plunged 21.2 percent. Last month, orders in that category dropped 6 percent.
Defense Purchases
Government spending for defense equipment surged 17.4 percent, after jumping 34.2 percent. Lockheed Martin Corp., the biggest U.S. defense contractor, and rival Raytheon Co. last week reported an increase in fourth- quarter sales of missiles, sensors, radar and other electronics to the U.S. military. The low cost of financing has helped boost demand for some consumer durables. Maytag Corp., the third-biggest appliance manufacturer, last week said sales of home appliances rose 2.2 percent to $1.08 billion from the same quarter a year earlier. //www.quote.bloomberg.com

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