Key factory orders up in January

Pending home resales rise to highest level since 2010

In this Tuesday, Jan. 8, 2013 photo, a salesman shows customers washers and dryers at Aggressive Appliances store in Orlando, Fla. Orders for U.S. factory goods that signal business investment plans jumped in January by the most in more than a year, suggesting companies are confident about their business prospects. The Commerce Department said Wednesday, Feb. 27, 2013,  that orders for so-called core capital goods, which include industrial machinery, construction equipment and computers, rose 6.3 percent in January from December. A sharp fall in demand for commercial aircraft caused overall durable goods orders to drop 5.2 percent, the first decline since August. (AP Photo/John Raoux)
In this Tuesday, Jan. 8, 2013 photo, a salesman shows customers washers and dryers at Aggressive Appliances store in Orlando, Fla. Orders for U.S. factory goods that signal business investment plans jumped in January by the most in more than a year, suggesting companies are confident about their business prospects. The Commerce Department said Wednesday, Feb. 27, 2013, that orders for so-called core capital goods, which include industrial machinery, construction equipment and computers, rose 6.3 percent in January from December. A sharp fall in demand for commercial aircraft caused overall durable goods orders to drop 5.2 percent, the first decline since August. (AP Photo/John Raoux)

— Orders for U.S. factory goods in a key category jumped last month by the most in more than a year, the Commerce Department said Wednesday.

Orders for so-called core capital goods, which include industrial machinery, construction equipment and computers, rose 6.3 percent in January from December.

In a separate report, the National Association of Realtors said Wednesday that the number of people who signed contracts to buy previously owned homes the United States rose in January from December to the highest level in more than 2 1/2 years.

A sharp fall in demand for commercial aircraft caused overall durable-goods orders to drop 5.2 percent, the first decline since August, the Commerce Department report said.

Orders for commercial aircraft are volatile and can cause large swings in the overall figure. Boeing reported orders for only two planes in January, down from 183 in December. Orders for defense equipment also fellby the most in more than 12 years.

Durable goods are items expected to last at least three years. Excluding aircraft, such orders rose 1.9 percent last month.

The increase in core capital goods suggests companies are willing to expand their production capacities despite worries that automatic government spending cuts will slow the economy in the coming months.

“The fact remains that capital spending appears to be holding up very well,” Dan Greenhaus, chief global strategist at BTIG, a brokerage firm. “In fact, it appears to be accelerating.”

Still, the jump in orders wasn’t broad-based and occurred mostly in machinery and manufactured metal products. Orders for computers and communications equipment both fell, and orders for autos and auto parts were unchanged.

And even with the increase, orders have mostly just recovered last year’s losses. Total core capital goods orders reached $67.7 billion in January, just above December 2011’s level.

About $85 billion in federal spending cuts are scheduled to kick in Friday, and there is little sign that the White House and Congress will reach a deal to avoid them. Core capital goods orders dipped 0.3 percent in December but posted strong gains of 3.3 percent in November and 3 percent in October.

“Manufacturing is one of the relative bright spots in the economy,” said Guy Le-Bas, the chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “The avoidance ofthe fiscal-cliff issues triggered some increased demand from businesses.”

The index of pending home resales increased 4.5 percent to 105.9, the highest level since April 2010, after arevised 1.9 percent drop the prior month, the report from the National Association of Realtors said.

Home buying is coming within reach of more Americans as low mortgage rates and gains in employment bring more people into the market.

“Things are getting better in housing,” Daniel Silver, an economist at JPMorgan Chase & Co. in New York, said before the report. “Low mortgage rates, an improving economy and an improving job market are helping demand. With home prices rising, most people who’d waited for prices to bottom will want to buy now.” All four national regions saw an increase, Wednesday’s report showed, led by an 8.2 percent jump in the Northeast. Sales rose 4.5 percent in the Midwest, 5.9 percent inthe South and 0.1 percent in the West.

Compared with a year earlier, pending sales increased 10.4 percent, before seasonal adjustment, after a 4.7 percent gain in the 12 months ended in December. The index was projected by analysts to rise 8.2 percent.

Information for this article was contributed by Christopher S. Rugaber of The Associated Press, Shobhana Chandra, Ainhoa Goyeneche and Alex Kowalski of Bloomberg News.

Business, Pages 25 on 02/28/2013

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