Ahead of the Bell: US factory orders

US factory orders expected to show no growth in October

Associated Press
US factory orders drop 0.7 percent in October
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In this Nov. 11, 2014 photo, Agil Alhaddi stacks roof rails for the 2015 Ford F-150 at the Dearborn Truck Plant in Dearborn, Mich. The Commerce Department releases factory orders for October on Friday, Dec. 5, 2014. (AP Photo/Paul Sancya)

WASHINGTON (AP) -- The Commerce Department reports on U.S. factory orders for October. The report will be issued at 10 a.m. EST Friday.

ORDERS SLOW: The expectation is that orders will not show any growth in October, compared with September, according to a survey of economists by data firm FactSet.

MANUFACTURING ACTIVITY: In September, orders declined, dragged down by falling demand in the volatile aircraft category.

The report on factory orders covers durable goods, items expected to last at least three years, and non-durable goods such as chemicals and clothing.

In a preliminary report last week, the government found that orders for durable goods increased a slight 0.4 percent in October after declines in both September and August, reflecting weakness in demand for aircraft.

The October gain in demand for durable goods was small, with declines in a number of categories including machinery, computers and primary metals such as steel. In addition, a key category that serves as a proxy for business investment spending fell 1.3 percent in October after a similar 1.3 percent drop in September. It was the biggest setback since a 1.4 percent decline in May.

Economists believe these declines will be temporary. They note that spending by businesses on new equipment grew at a solid annual rate of 10.7 percent in the third quarter and they expect further gains in coming months as businesses ramp up spending to expand and modernize their operations.

The Institute for Supply Management, a trade group of purchasing managers, reported Monday that its closely watched gauge of manufacturing activity slipped a modest amount in November to a reading of 58.7, down from 59 in October, which matched a three-year high reached in August. Any reading above 50 signals expansion.

Manufacturing has been a key driver of U.S. growth this year even as it has fallen off overseas in such key economies as China and Europe.

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