Factory orders unexpectedly jump 1.1 percent

Orders to U.S. factories posted a surprisingly big gain in November, reflecting strong demand in a number of industries
from steel and industrial machinery to computers and chemicals.

The advance was double what had been expected and
provided further evidence that manufacturers are beginning to pull out of their steep slump.

The Commerce Department
said Tuesday that orders rose by 1.1 percent in November, much better than the 0.5-percent increase economists had forecast.
The increases were widespread outside of autos and aircraft, which posted declines.

The report was the latest evidence
of a widespread rebound in manufacturing as industries from China to Europe are beginning to flash recovery signs. The Institute
of Supply Management had reported Monday that its key gauge of U.S. factory activity showed manufacturing was expanding in
December at the fastest pace in more than three years.

The Commerce report on orders showed that demand for durable
goods, items expected to last at least three years, rose by 0.2 percent in November, unchanged from a preliminary estimate
the government made two weeks ago. Durable goods orders had fallen by 0.7 percent in October.

Orders for nondurable
goods rose by 1.8 percent in November after an even stronger 2.2-percent rise in October. The strength in November reflected
gains in demand for petroleum, chemical products and textiles.

In the durable category, orders for commercial aircraft
dropped sharply and demand for motor vehicles was also down but orders increased in a number of other areas from iron and
steel, up 4.6 percent, to machinery, up 3.3 percent, and computers and electronics products which shot up by 12.8 percent.

The 1.1-percent rise in total orders in November was the seventh increase in the past eight months and left factory
orders at a seasonally adjusted $365.3 billion.

Economists are hoping that the fortunes of the manufacturing sector
are beginning to rebound as the economy struggles to emerge from the worst recession since the 1930s.

The overall
economy as measured by the gross domestic product grew at an annual rate of 2.2 percent in the July-September quarter. That
marked the first positive increase in the GDP after four consecutive quarterly declines.

Analysts are expecting
an even bigger gain in the just-completed October-December quarter with some of that strength coming from a revival in the
fortunes of manufacturers.

Further gains are expected in December given that the ISM report showed its index for
new orders jumped to the highest level last month in five years.

It is hoped that factories will begin rehiring
laid off workers as they ramp up production. And a turnaround in employment could boost incomes and increase consumer spending,
fueling the recovery.

The worry among economists has been that the current recovery could falter unless the unemployment
rate begins to show sustained improvement.

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