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Stronger consumer demand means businesses ordered more from factories in Nov.

By Martin Crutsinger
Associated Press / January 5, 2011

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WASHINGTON — Businesses ordered more factory goods in November, responding to stronger consumer demand for household appliances, computers, and furniture.

The Commerce Department said yesterday that total orders increased 0.7 percent in November. That followed a 0.7 percent drop in October.

The overall figure was pulled down by a drop in orders from the volatile transportation sector.

Excluding aircraft and autos, orders rose 2.4 percent — the largest jump for that category in eight months.

The November increase left total orders at $424.5 billion. Economists consider that a healthy range for manufacturing activity. It’s 20.4 percent above the recession low, hit in March 2009.

Manufacturing activity has expanded in every month since the recession officially ended in June 2009. Analysts said November’s increase in factory orders should translate into further gains in production in 2011.

Consumers are coming off the busiest holiday shopping season in four years. Businesses are anticipating stronger economic activity to continue this year, helped by a tax cut that will put more money in consumers’ pockets.

Overall, orders for long-lasting goods dropped 0.3 percent. But the decline was heavily influenced by a 50.6 percent plunge in orders for commercial aircraft. Most big-ticket consumer goods showed gains.

Household appliances increased 3.8 in November. Furniture orders rose 4.2 percent. And demand for computers jumped 13.5 percent.

Consumer strength was also apparent in the 1.7 percent rise in nondurable goods. Food, gasoline, and clothing all showed gains in November.

Companies also contributed to the rising demand for manufactured goods. A key category that is considered a good proxy for business expansion rose 2.6 percent. Investment in equipment and software has been growing at double-digit rates over the past year, one of the brightest areas of the economy.

One area of weakness in November was declining demand for autos. Still, through the first 11 months of last year, orders for cars and trucks were up more than 12 percent from the same period in 2009.

General Motors said yesterday that its US sales rose 6.3 percent last year. New models helped the company make a comeback from its 2009 bankruptcy. GM was the first major auto company to report year-end sales.

Demand for iron and steel, the raw materials for a raft of goods, rose a sharp 21.7 percent. That suggests factories are gearing up to produce more autos and appliances in the months ahead.

In the machinery category, demand for mining gear and oil- and gas-drilling equipment surged 40.3 percent. That reflects higher energy prices, which have spurred exploration in the United States and abroad.