Factory-order surge signals investment

By Martin Crutsinger

Associated Press

Published: Wednesday, March 6 2013 9:07 p.m. MST

WASHINGTON — U.S. orders for machinery and other factory goods that signal business investment surged in January, indicating confidence in the economy.

The Commerce Department said Wednesday orders for so-called core capital goods, which also include equipment and computers, rose 7.2 percent from December. It was the biggest gain in more than a year and higher than the initial estimate the government made last week of a 6.3 percent.

Total factory orders fell 2 percent in January from December, but that was mostly because of a steep decline in volatile aircraft and defense orders that was also reported last week.

Demand for durable goods, items expected to last at least three years, dropped 4.9 percent. Demand for nondurable goods, such as chemicals and paper, rose 0.6 percent.

Economists pay closer attention to core capital goods because they are a good measure of business investment plans. The category excludes aircraft and military orders, which can fluctuate sharply from month to month.

An increase suggests companies kept expanding their production capacities in January, even taxes rose and automatic government spending cuts loomed. Nearly all Americans who draw a paycheck began paying higher Social Security taxes on Jan. 1, while income taxes rose for the highest earning workers.

Across-the-board spending cuts started to take effect on March 1.

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