Orders to U.S. factories posted a big gain in December, far exceeding expectations and adding to evidence that the manufacturing sector is supporting the economic recovery.
The Commerce Department said Thursday that orders rose by 1 percent last month, double the 0.5 percent forecast by economists surveyed by Thomson Reuters. It was the eighth increase in the past nine months.
The advance was led by big gains in orders for metals such as steel and aluminum, as well as machinery. However, orders for transportation equipment as well as computers and electronics dipped slightly.
Economists are hoping the manufacturing sector is beginning to rebound as the economy struggles to emerge from the worst recession since the 1930s. The sector has become a pocket of strength, though some of it flows from temporary factors such as customers needing to add to depleted stockpiles.
Orders for durable goods, items expected to last three years, rose 1 percent from last week’s preliminary estimate of 0.3 percent. Orders for nondurable goods — items such as chemicals, paper and food — rose 1 percent.
The factory orders report for December showed that demand for transportation products fell 0.5 percent, led by a 34.1 percent decline in new orders for commercial aircraft, an extremely volatile category. Demand for motor vehicles and parts, however, rose 2.6 percent, while orders for defense aircraft and parts rose 19.8 percent.
Excluding transportation, factory orders would have risen 1.2 percent following a 2.1 percent increase in October.
Demand for primary metals such as steel rose 8.2 percent, and orders for machinery gained 6.6 percent.
As their customers restock their shelves, manufacturers need to ramp up production to match demand. That could mean hiring more workers, which would help invigorate the economic rebound.
Manufacturing activity grew in January to its strongest point since 2004. The Institute for Supply Management said Monday its manufacturing index read 58.4 in January, compared with 54.9 in December. It was the sixth straight month of expansion.
The nation’s gross domestic product, the broadest measure of the economy’s output, grew by 5.7 percent in the fourth quarter of last year, the second straight quarter of growth. The economy grew at a 2.2 percent rate in the third quarter after a record four straight quarters of decline.