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Business Title: Demand for Capital Goods in U.S. Rebounds as Business Spending Holds Up Dec. 23 (Bloomberg) -- Orders for U.S. capital equipment rebounded in November, signaling a slowdown in business investment may be less pronounced than some economists projected. Bookings for goods like computers and communications gear climbed 2.6 percent after a 3.6 percent decline in October that was smaller than previously estimated, figures from the Commerce Department showed today in Washington. Total orders dropped 1.3 percent, depressed by volatile demand for aircraft, and bookings excluding transportation equipment rose more than forecast. Capital spending has been a source of strength for the world’s largest economy at the same time that household purchases are starting to accelerate. Manufacturing, the industry that helped pull the U.S. out of the worst recession since the 1930s, has been resilient throughout the recovery, bolstered in part by overseas demand for American-made goods. “There is still some equipment spending going on,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight in Lexington, Massachusetts. “It’s going to be a positive contributor to growth.” Another Commerce Department report today showed consumer spending rose in November as incomes climbed. Household purchases advanced 0.4 percent after a 0.7 percent gain in October that was larger than previously estimated. Incomes rose 0.3 percent and the Federal Reserve’s preferred price measure showed inflation remained below policy makers’ comfort zone. Jobless Claims Initial filings for unemployment insurance declined by 3,000 to 420,000 in the week ended Dec. 18, matching the median forecast in a Bloomberg News survey, Labor Department figures showed today in Washington. Those already collecting benefits fell in the previous week to 4.06 million. Stock-index futures fluctuated after the reports. The contract on the Standard & Poor’s 500 Index maturing in March fell 0.2 percent to 1,252.50 at 8:57 a.m. in New York. Treasury securities were lower, pushing the yield on the benchmark 10-year note up to 3.36 percent from 3.35 percent late yesterday. The median forecast calling for a decline in total durable goods orders reflected 74 projections in a Bloomberg News survey. Estimates ranged from a drop of 3.6 percent to an increase of 3 percent. Bookings for commercial aircraft plunged 53 percent last month after a 7.1 percent October decline. Excluding transportation, bookings increased 2.4 percent, the biggest gain since March. They were forecast to rise 1.8 percent, according to the Bloomberg survey. Business Investment Orders for non-defense capital goods excluding aircraft are considered a proxy for future business investment. The revised drop in October compared with a previously estimated 4.5 percent decrease. Over the past three months, bookings climbed at a 7.1 percent annual pace, down from an 11 percent advance in October. Demand for computers and electronic equipment climbed 5.8 percent last month, the biggest gain since February 2009. Shipments of non-defense capital goods excluding aircraft, used in calculating gross domestic product, increased 1 percent after a 1.2 percent drop in October. The U.S. economy grew at a 2.6 percent annual pace from July through September, the Commerce Department said yesterday. Corporate profits increased 1.6 percent during the third quarter and were up 26 percent from the same three months last year. Industrial Production Today’s report supports others suggesting factories are contributing to growth in the fourth quarter. The Fed last week said U.S. industrial production increased in November by the most in four months. Some manufacturers are projecting higher profits as orders increase. Joy Global Inc., the maker of P&H and Joy mining equipment, last week announced a fiscal 2011 profit forecast that topped analysts’ estimates in a Bloomberg survey. “The improving bookings rate supports our view that our mining customers will continue to increase their capital expenditure plans,” Mike Sutherlin, chief executive officer of the Milwaukee-based company, said in a Dec. 15 statement. “We continue to ramp up our production to meet this expected growth in demand.” Foreign sales are a bright spot for factories, and exports in October rose to the highest level in more than two years, according to Commerce Department data released Dec. 10. Some businesses are responding to greater demand from the U.S. and abroad by replacing aging equipment and bringing more parts of their plants online.
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