Aircraft orders push gains in durable goods sector

Associated Press photo by DAVE MARTIN -- Brake drums roll down a conveyor belt earlier this month at Webb Wheel Products in Cullman, Ala. The federal government reported Monday that demand for long-lasting manufactured goods rose sharple in December. Show caption
Associated Press photo by DAVE MARTIN -- Brake drums roll down a conveyor belt earlier this month at Webb Wheel Products in Cullman, Ala. The federal government reported Monday that demand for long-lasting manufactured goods rose sharple in December.

U.S. demand for long-lasting manufactured goods rose sharply in December, helped by a strong gain in volatile aircraft orders. But companies slowed orders for computers and other goods that signal investment plans, indicating manufacturing could stay weak in 2013.

In a separate report, a measure of Americans who signed contracts to buy homes fell last month after reaching a 2½-year high in November. Sales were held back by a limited supply of available homes.

The National Association of Realtors said Monday that its seasonally adjusted index for pending home sales dropped 4.3 percent in December from November to 101.7. That’s still 6.9 percent higher than it was a year ago.

The decline signals that sales of previously occupied homes may cool off in the coming months. There’s generally a one- to two-month lag between a signed contract and a completed sale.

Still, completed sales of previously occupied homes rose last year to their highest level in five years, one of many signs of recovery in the housing market last year. And the Realtors’ group forecasts that sales will rise 9 percent this year, as the recovery strengthens.

The Commerce Department said Monday that overall orders for durable goods increased 4.6 percent in December compared with November. The gains were led by a 56.4 percent increase in military aircraft orders and a 10.1 percent increase in commercial aircraft orders.

Orders for machinery, communications equipment and primary metals such as steel also showed increases.

Still, demand for core capital goods, a measure of business investment plans, rose just 0.2 percent. That followed two straight monthly gains of 3 percent.

Orders for durable goods, which are expected to last at least three years, can fluctuate from month to month. For all of 2012, durable goods orders rose 4.1 percent. But demand for core capital goods fell 0.3 percent for the year.

Slower growth in business orders has hurt manufacturing, which struggled to gain momentum in 2012. While orders for durable goods rebounded in the final months of last year, economists expect the overall trend to stay weak this year.

“The strength in durable goods orders for December is a most welcome development,” said Dan Greenhaus, an analyst at BTIG. “Going forward though, despite the better numbers, we still expect business investment … to slow yet again in 2013. This is a trend that remains in place given the weaker demand environment.”