U.S. Factory Orders Probably Rose in November on Oil Products

U.S. Factory Orders Probably Rose in November on Oil Products


Jan. 3 (Bloomberg) -- Orders to U.S. factories probably rose in November, propelled by gains at petroleum refiners as prices jumped, economists said ahead of a report today.

The projected 0.5 percent increase, the median estimate of 60 economists surveyed by Bloomberg News, would match October's rise.

A price-induced increase in the value of bookings for non- durable goods, such as oil, offset a decline in demand for machinery that points to a slowdown in investment, economists said. Other reports today may show employment is also cooling as businesses become concerned the economic expansion will stall.

``The increased uncertainty of recent months is weighing on CEO confidence and causing them to behave with a little more risk aversion,'' said Richard DeKaser, chief economist at National City Corp. in Cleveland.

The Commerce Department is scheduled to issue the report on orders at 10 a.m. in Washington. Estimates ranged from a drop of 0.5 percent to a gain of 2 percent.

At 8:15 a.m. New York time, a report from ADP Employer Services is forecast to show companies added 33,000 workers to their payrolls in December, down from 189,000 a month earlier, according to the Bloomberg survey. The figures will help economists finalize projections for the government's job report due tomorrow.

In a separate report today, the Labor Department figures may show initial jobless claims last week fell to 345,000 from 349,000 the prior week, according to the survey median. The total number of Americans receiving jobless benefits swelled to a two-year high in the middle of December.

Investing Less

Companies may be reining in investments as banks make borrowing more difficult and consumer spending cools as the housing slump deepens, economists said. The Commerce Department said last week that orders of durable goods, those meant to last several years, rose a less-than-forecast 0.1 percent in November.

Durables make up just over half of the factory orders report. Excluding demand for transportation equipment, orders fell 0.7 percent, led by a drop in demand for machinery and military equipment.

The outlook for December bookings is even worse. Manufacturing shrank the most last month in almost five years, according to a report yesterday by the Institute for Supply Management. The Tempe, Arizona-based purchasers' orders index dropped to the lowest level since October 2001.

Fewer Shipments

FedEx Corp., the second-largest U.S. package-delivery company, said Dec. 20 that second-quarter profit fell as a slowing economy cut demand for freight shipments and fuel costs rose. The company lowered its capital spending forecast for the full year by 11 percent and said additional reductions were ``possible.''

``We see challenging near-term economic trends,'' Chief Executive Officer Fred Smith said in a statement.

Orders for non-durable goods may have risen in November because higher commodity prices increased the value of goods sold, economists said. Crude oil on the New York Mercantile Exchange averaged $94.63 a barrel in November, compared with $85.66 in October.

Steel and wheat prices have also increased.

``We are expecting a pretty decent increase in non-durable orders but part of that is a nominal effect because of energy and commodity prices,'' said Julia Coronado, a senior economist at Barclays Capital Inc. in New York. Adjusted for prices, ``we do expect orders to be quite subdued.''

Another challenge companies may face is trying to work off inventories built up over the last couple of quarters, economists said.

An increase in stockpiles added 0.89 percentage point to growth from July through September, helping propel the pace of expansion to the fastest in four years.

Economists surveyed by Bloomberg News last month project growth in the last three months of 2007 slowed to a 1 percent pace, one-fifth the third quarter's rate.

BLOOMBERG