US factory orders rebound, brighten growth view

New orders received by US factories unexpectedly rose in November, and orders excluding transportation recorded their largest gain in eight months, providing more signs the economic recovery was on sustainable path.

The Commerce Department said on Tuesday orders for manufactured goods increased 0.7% after dropping a revised 0.7% in October.

Economists polled by Reuters had forecast factory orders slipping 0.1% in November from a previously reported 0.9% decline in October. Orders have risen in four of the last five months.

Manufacturing has been the star performer during the recovery from the worst recession since the 1930s and continues to expand. Factories appear to be ramping up activity to meet a pickup in demand from consumers and businesses.

Analysts have forecast economic growth at an annual pace of between 3% and 3.5% in the fourth quarter after a 2.6% expansion in the third quarter.

US financial markets had little reaction to the data. US stocks were little changed as optimism over the economic outlook was offset by a decline in consumer stocks.

US Treasury debt prices edged higher The euro climbed to a three-week high against the dollar.

On Monday the Institute for Supply Management said its index of national factory activity climbed to a seven-month high in December, hoisted by sturdy gains in new orders and production.

The Commerce Department report showed orders excluding transportation increased 2.4% in November, the highest since March, after a 0.1% gain the prior month.

Unfilled orders at US factories increased 0.6% in November after rising 0.7% the prior month. Shipments increased 0.8%, rising for a third consecutive month, while inventories gained 0.8% after rising 1.1% in October.

The department revised durable goods orders for November to show a much smaller 0.3% fall rather than the previously reported 1.3 drop. Excluding transportation, orders for durable goods increased a bigger 3.6% in November instead of 2.4%.

Orders for non-defense capital goods excluding aircraft, seen as a measure of business confidence, increased 2.6% after 3.2% decline in October.