Ahead of the Bell: US factory orders

US factory orders expected to decline for sixth straight month in January

Associated Press
US factory orders slip 0.2 percent
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In this photo made on Thursday, Feb. 12, 2015, a man sprays parts to builds fans for industrial ventilation systems at the Robinson Fans Inc. plant in Harmony, Pa. The Commerce Department releases factory orders for January on Thursday, March 5, 2015. (AP Photo/Keith Srakocic)

WASHINGTON (AP) -- The U.S. Commerce Department reports on January factory orders Thursday at 10 a.m. Eastern.

ORDERS DIP: The expectation is that orders fell 0.3 percent in January, according to a survey of economists by data firm FactSet.

STRING OF DECLINES: It the forecasts are correct, it would mark the sixth consecutive month of declines after a 3.4 percent slide in December.

Thursday's numbers entail long-lasting durable goods that are expected to last at least three years and nondurable goods such as paper, chemicals and clothing.

In an advance report last week, the government said that durable goods increased 2.8 percent in January, led by an order surge in the volatile commercial aircraft sector.

But economists were encouraged by a modest 0.6 percent increase for core capital goods, the category that serves as a proxy for business investment spending. That increase followed declines of 0.5 percent and 0.7 percent in November and December, respectively.

Weak growth in China, Europe and Japan has depressed demand for American exports. A stronger dollar is also hurting American manufacturers because it means U.S. goods are more expensive overseas, while foreign products are cheaper in the United States.

The Institute for Supply Management reported Monday that its manufacturing index slipped to 52.9 in February, down from 53.5 in January. It was the fourth straight drop and the lowest reading since January 2014. Still, any reading above 50 indicates that the manufacturing sector is expanding.

The index had reached a three-year high in August. Economists believe manufacturing will expand further this year but at a slower pace than 2014.

The trade deficit — the amount that imports exceeded exports — widened in the October-December quarter and subtracted 1.1 percent point from economic growth. Because of the drag from trade and other factors, the overall economy, as measured by the gross domestic product, grew at an annual rate of 2.2 percent in the fourth quarter, down from a torrid pace of 5 percent in the July-September quarter.

Economists remain optimistic that stronger consumer spending, powered by rising employment and wages, will push overall GDP growth above 3 percent this year, marking the fastest pace for the economy in a decade.

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