U.S. factory orders top expectations in October amid strong gains in demand for machinery

New orders for U.S.-manufactured goods increased more than expected in October amid strong gains in demand for machinery and a range of other goods, which could allay concerns of a sharp slowdown in manufacturing.

The Commerce Department said on Monday that factory orders jumped 1.0 per cent after rising 0.3 per cent in September. Economists polled by Reuters had forecast orders advancing 0.7 per cent. Orders shot up 12.8 per cent on a year-on-year basis in October.

The Federal Reserve’s fastest rate-hiking cycle since the 1980s as it battles inflation is dampening demand for goods, undercutting manufacturing, which is also being squeezed by the rotation of spending back to services.

An Institute for Supply Management survey last week showed its measure of the nation’s factory activity contracted in November for the first time in 2-1/2 years.

Manufacturing accounts for 11.3 per cent of the U.S. economy. October’s jump in factory orders was driven by a 2.2 per cent rise in bookings for transportation equipment, which followed a 2.3 per cent increase in September. Transportation equipment orders were boosted by increases in orders for both defence and civilian aircraft. Motor vehicle orders rebounded 1.7 per cent.

Orders for machinery rose 1.5 per cent. There were also solid gains in orders for computers and electronic products as well as electrical equipment, appliances and components.

The Commerce Department also reported that orders for non-defense capital goods, excluding aircraft, which are seen as a measure of business spending plans on equipment, increased 0.6 per cent in October, instead of 0.7 per cent as reported last month.

Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, rose 1.5 per cent. They were previously reported to have jumped 1.3 per cent in October.

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