U.S. Markets open in 7 hrs 9 mins

U.S. Industry Giants Wary Even As Data Show Factory Gain

A spate of mostly upbeat data Friday show improving industrial growth in the U.S. and China. But it's not clear the nation's manufacturing conglomerates believe the hype.

United Technologies (UTX) late Thursday was the latest to tamp down the enthusiasm, forecasting growth that merely bracketed estimates by analysts. Industrial conglomerates 3M (MMM) and Honeywell International (HON) earlier this week also muted expectations with their guidance.

U.S. industrial production rose 1.1% in November, the Federal Reserve reported Friday, much better than expected and rebounding from a 0.7% drop in October. Auto output shot up 3.4%, the best advance since January, as Northeastern drivers replaced cars and trucks damaged by Superstorm Sandy.

Meanwhile, U.S. manufacturing picked up to an eight-month high in December, according to data Friday from financial information firm Markit. Its flash Purchasing Managers Index rose to 54.2. Readings over 50 indicate economic expansion.

And HSBC said manufacturing activity in China reached a 14-month high in December, in large part on improved domestic demand within the world's No. 2 economy. Its preliminary PMI hit 50.9, up from November's 50.4 and the fourth straight monthly gain. That report sent the Shanghai composite, a big loser for much of 2012, surging 4.3% Friday.

Europe is still flashing troubling signs. Markit's eurozone purchasing managers' composite output index climbed to 47.3 in December, a nine-month high, though still below the break-even 50 level. The continent's automakers posted another disappointing month for sales, data out Friday show.

Altogether, the data are good, not great, Raymond James chief economist Scott Brown said.

In the U.S., resurgent auto sales and a strengthening housing market could deliver a tail wind for the economy, if there is a fiscal cliff deal to avoid the year-end tax hikes and massive spending cuts.

"There's been a lot of fear out there because of the fiscal cliff," Brown told IBD. "Once we get that out of the way, the pieces are in place for some growth.

Nariman Behravesh, chief economist at IHS Global Insight, said it's not the cliff itself that is making businesses cautious. It's uncertainty over the tax and regulatory environment in 2013.

"Consumers are spending. Housing is recovering. If we can reduce this uncertainty, business will be more forthcoming with hiring and spending," he said.

United Technologies — maker of Otis elevators, Pratt & Whitney jet engines and Sikorsky military helicopters — on Thursday projected 2013 earnings of $5.85 to $6.15 a share. At the midpoint, that's a 13% bump from the $5.32 per share it forecast for 2012. Analysts surveyed by Thomson Reuters expect $6.12 for 2013.

United Tech shares fell a fraction Friday. So did Honeywell and 3M.

General Electric (GE) was flat after announcing it was adding $10 billion to its stock buyback, as well as hiking its dividend.