Jan. 28 (Bloomberg) -- U.S. orders for goods made to last at least three years were unexpectedly unchanged in December, restrained by less demand for metals, communications equipment and appliances, a government report showed. Orders for durable goods held at $181.4 billion after falling 2.3 percent in November, the Commerce Department said in Washington. Excluding transportation equipment, orders dropped 0.7 percent after falling 3.2 percent in November. Economists surveyed by Bloomberg News had forecast a 2 percent rise in orders, according to the median estimate. Companies, wary of letting inventories pile up faster than sales, may have taken a break after boosting orders in four of the preceding six months. Some economists have forecast that business spending on new equipment and inventory rebuilding will fuel production increases this year, helping boost the economy.
``Judging from company comments, many are running inventories at very lean levels,'' said Joel Naroff, president of Naroff Economic Advisors Inc. in Holland, Pennsylvania, before the report. ``Until you're absolutely sure that the expansion will last, businesses feel that caution makes a lot sense.'' Orders excluding transportation equipment were projected to rise 2.5 percent, the Bloomberg survey of economists found. ``We're counting on business-equipment spending as a major source of strength for the economy this year,'' said Sung Won Sohn, chief economist at Wells Fargo & Co. in Minneapolis, before the report. ``Inventory rebuilding should also contribute.'' The government said shipments of durable goods last month rose 0.6 percent to $185.4 billion after rising 0.3 percent in November. Inventories rose 0.2 percent, and unfilled orders increased 0.4 percent.
Appliances
Orders for appliances and electronic products dropped 0.5 percent last month after falling 2.2 percent in November. Bookings for metals fell 2.8 percent after dropping 1.8 percent. Demand for communications equipment slumped 18.1 percent in December after a 46.4 percent slump. Orders for non-defense capital goods excluding aircraft, a proxy for future business investment, fell 0.4 percent last month after dropping 5.6 percent in November. Shipments, which the government uses to construct quarterly gross domestic product figures, rose 0.5 percent after falling 0.4 percent. Orders waiting to be filled for such equipment fell 0.5 percent. Transportation equipment orders rose 1.4 percent, following a drop of 0.3 percent in November. Orders for commercial aircraft rose 25.5 percent after falling 12.8 percent.
Motor Vehicles
Bookings for motor vehicles rose 2 percent after falling 1.3 percent. Machinery bookings rose 1.7 percent last month after rising 2.8 percent in November. Manufacturing accounts for about a seventh of the economy. Orders rebounded in January, according to recent manufacturing data. The Federal Reserve Bank of Philadelphia's index of manufacturing this month was the highest since December 1993. A factory index compiled by the Buffalo branch of the Federal Reserve Bank of New York showed production in the state rose to a record in January as new orders and shipments climbed.
At Texas Instruments, orders are rising.
``Overall markets are lifting,'' said Ron Slaymaker, vice president at Texas Instruments, in a televised interview yesterday with Bloomberg News. Production ``capacity has continued to move up. We're now entering into that part of the cycle where capacity is tightening pretty much across the board, and we're starting to see demand exceed supply.''
Inventories
Inventories at manufacturers, wholesalers and retailers rose in November for a third month, according to Commerce Department statistics, as companies grew more confident they can sustain sales as the economy gathers strength. As a percentage of sales, inventories remained at an historic low. Businesses had enough supplies on hand at the end of November to last 1.35 months at the current sales pace, matching the lowest on record. Business fixed investment, which includes spending on commercial construction as well as equipment and software, rose at a 12.8 percent annual rate in the third quarter, the most in three years.
``We are seeing an upturn in capital spending,'' said Alan Boeckmann, chief executive officer of Fluor Corp., in a televised interview Friday with Bloomberg News at the World Economic Forum in Davos, Switzerland. ``We're looking for even more in 2004.'' Aliso Viejo, California-based Fluor, the world's biggest publicly traded engineering and construction company, builds and maintains facilities for oil and gas producers. //www.bloomberg.com