U.S. factory orders climb 1.8%

WASHINGTON — Orders placed with U.S. factories increased less than forecast in December, reflecting a drop in nondurable goods that partly countered gains in construction equipment and computers.

Factory orders rose 1.8 percent in December compared with November, when orders had fallen 0.3 percent, the Commerce Department said Monday.

“Manufacturing’s fine,”said Brian Jones, senior U.S. economist at Societe Generale in New York, who projected a 1.9 percent gain in orders. “The economy continues to improve.”

Demand for core capital goods, a category considered a proxy for business investment plans, dipped 0.3 percent in December after strong gains of 3.3 percent in November and 3 percent in October.

Orders for durable goods, items expected to last at least three years, rose 4.3 percent, slightly below the 4.6 percent estimated in a preliminary report. The increase reflected strong gains for military and civilian aircraft.

Orders for nondurable goods such as petroleum products, chemicals and paper, declined 0.3 percent in December after a 1 percent drop in November. The weakness reflected declines in petroleum products, a drop that was related to declines in energy prices during the month.

For the year, total factory orders rose 3 percent to $5.66 trillion. This reflected a slowing in the manufacturing sector after an 11.8 percent rise in orders in 2011. Demand for investment goods fell 0.3 percent to $759.4 billion.

For December, orders for commercial airplanes rose 10.1 percent and demand for military aircraft jumped 56.4 percent. Orders for motor vehicles and parts dropped 1.2 percent. Demand for machinery fell 1.1 percent, but orders for computers and other electronic products rose 4.1 percent. Demand for construction equipment jumped 12.2 percent.

The overall economy contracted in the October-December quarter at an annual rate of 0.1 percent, the first negative reading since the recession was ending in the summer of 2009. The decline reflected a big drop in defense spending, slower business stockpiling and a fall in exports.

However, other parts of the economy showed strength, including housing and business investment on equipment and software, which rose at an annual rate of 12.4 percent, the best showing in more than a year and a rebound from a decline in business investment in the July-September quarter.

The auto industry remains a source of strength for manufacturing and the economy. Light vehicles sold at a 15.2 million annual rate in January after 15.3 million in December, according to data from Ward’s Automotive Group.

Sales for Chrysler, majority owned by Fiat SpA, climbed to 117,731 cars and light trucks from 101,149 a year earlier, led by demand for its Dodge models, the company, based in Auburn Hills, Mich., said last week in a statement. The Dodge Dart compact had its best month since its introduction in June.

Information for this article was contributed by Martin Crutsinger of The Associated Press and Michelle Jamrisko of Bloomberg News.