NEW YORK - U.S. factory orders rose in October as demand increased for military hardware and nondurable goods, while a labor market report suggested more people are finding jobs.
"The economy is in pretty good shape," said David Resler, chief economist at Nomura Securities International Inc. "The job market has improved quite a bit in the last year."
The 0.5 percent rise in bookings at manufacturers followed no change in September, the Commerce Department reported.
Meanwhile, the number of people continuing to collect unemployment benefits fell in the week that ended Nov. 20 to 2.723 million, the lowest since April 2001, the Labor Department said yesterday.
Initial unemployment claims rose last week by 25,000 to 349,000, a rise that may be overstated because of difficulties adjusting the data for the Thanksgiving holiday. Employers probably added 200,000 workers to their payrolls last month, bringing to more than 1 million the number of new jobs created since June, the government is forecast to report today.
Nine of 12 Federal Reserve Bank districts reported increases in manufacturing, according to the central bank's latest regional survey of the economy, issued yesterday. The report, prepared by the Dallas Fed, included data collected from late October to Nov. 22. Orders improved for chemicals, food, and products to supply the aerospace, agriculture, energy, medical, defense and construction industries, the Fed's report showed.
Fed policy makers are forecast to raise their benchmark overnight bank lending rate a quarter point to 2.25 percent at their Dec. 14 meeting to keep inflation in check.
Economists had forecast factory orders to rise 0.2 percent to $371.3 billion. Excluding defense equipment, factory orders were unchanged in October, the Commerce Department said.
Orders for nondurable goods, which include industrial chemicals, drugs, papers and textiles, climbed 2.4 percent, the most since March, after dropping 1.1 percent in September.
Rising oil prices
The jump in the value of bookings may reflect rising prices for oil and other commodities. Orders for petroleum and coal products surged 8 percent in October, and drugs jumped 8.6 percent, the report said.
Durable goods orders, which account for more than half the total, fell 1.1 percent, the biggest drop since April, led by slow demand for cars and computers. A preliminary report last week had the orders falling 0.4 percent after a 1 percent gain in September.
Orders for capital goods excluding aircraft, a proxy for future business investment, fell 4.2 percent after a 5.4 percent September increase. Shipments of such goods, which the government uses to calculate figures on gross domestic product, rose 2 percent after a 0.3 percent decline.
"The shipments numbers have clearly been strong and more consistent with a growing economy," said Ken Mayland, president of ClearView Economics in Pepper Pike, Ohio.