©Reuters. File photo: Workers stand near a chimney at the adjacent factory of Icestone, a manufacturer of recycled glass countertops and surfaces, on June 3, 2021 in New York City, New York, USA.REUTERS/Andrew Kelly/File Photo
WASHINGTON (Reuters) – New orders for U.S. products rose only modestly in December, but are likely to recover in the coming months as backlogs pile up.
Factory orders rose 0.2% after rebounding 2.6% in November, the Commerce Department's Census Bureau said Friday. The increase was in line with economists' expectations. Orders in December increased by 0.8% compared to the same month last year.
Manufacturing, which accounts for 10.3% of the economy, is constrained by high interest rates. However, the outlook is bright.
The Fed kept interest rates unchanged on Wednesday. Fed Chairman Jerome Powell told reporters that interest rates have peaked and will be lowered in the coming months.
The Institute for Supply Management's manufacturing PMI moved closer to the recovery zone in January.
Orders for commercial aircraft rose 0.4% in December after surging 84.1% in November, while orders for cars, parts and trailers rose 0.9%. Orders for primary metals, computers, electronic products, electrical equipment, appliances, and parts also increased.
Shipments of manufactured goods remained flat. Manufactured goods inventories rose 0.1%, while outstanding orders rose 1.3% after rising by a similar amount in November.
The government also reported that orders for non-defense capital goods, excluding aircraft, which are used as an indicator of companies' capital investment plans, increased by 0.2% last month, instead of the estimated 0.3% increase.
Shipments of these so-called core capital goods were flat, rather than increasing by 0.1% as previously reported. Corporate capital investment recovered slightly in the fourth quarter.
