Durable Goods Orders Surge, Boosting Manufacturing Outlook

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Tim Boyle/Bloomberg via Getty ImagesAppliances including washers and dryers on display at a Best Buy store in Northbrook, Ill.
By Lucia Mutikani

WASHINGTON -- Orders for long-lasting U.S. manufactured goods surged in November and a gauge of planned business spending on capital goods recorded its largest increase in nearly a year, pointing to sustained strength in the economy.

The Commerce Department said Tuesday durable goods orders jumped 3.5 percent as demand increased for a range of goods from aircraft to machinery and computers and electronic products.

Last month's increase, which outpaced economist expectations for a 2 percent rise, more than reversed October's 0.7 percent drop. Excluding transportation, orders rose 1.2 percent, the largest increase since May.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, surged 4.5 percent, breaking two straight months of declines. It was the largest increase since January.

The report suggested strength in manufacturing and was further evidence of a firming economic growth outlook. %VIRTUAL-article-sponsoredlinks%From consumer spending to employment and trade, the foundations appear to be in place for sustained and strong economic growth in 2014.

The data support the U.S. Federal Reserve's decision last week to start trimming back its monthly bond purchases from January, a process which is likely to continue for much of next year.

"It's encouraging after the declines we had seen with the core capital orders the past couple of months. Sentiments were showing things were good but not the hard numbers. Things seemed to have turned now," said Sam Bullard, senior economist at Wells Fargo Securities (WFC) in Charlotte, N.C.

"This is a more encouraging sign for the outlook. Businesses going into 2014 are more confident in their outlook. The Fed is probably encouraged by this number and its recent trajectory with investments continuing to expand."

U.S. Treasury debt prices fell and yields rose on the better-than-expected durables report, which covers goods from toasters to aircraft. U.S. stock index futures were little changed.

Economists had expected orders for so-called core capital goods to increase 0.7 percent in November after a 0.7 percent fall in October.

The figures showed that shipments of core capital goods, which are used to calculate equipment spending in the government's measure of gross domestic product, increased 2.8 percent last month. That was the largest increase since March 2012. Shipments had dropped in September and October and last month's increase could see economists bumping up their fourth-quarter GDP estimates.

Last month, durable goods orders rose almost across the board, with notable gains in transportation.

Transportation equipment orders increased 8.4 percent after falling 3.5 percent. Civilian aircraft orders jumped 21.8 percent and orders for motor vehicles recorded their largest increase since February.

Boeing (BA) received orders for 110 aircraft in November, up from 79 aircraft the prior month, according to information posted on the aircraft company's website.

Outside transportation there were gains in orders for computers and electronic products, machinery and fabricated metal products, among others.

-Additional reporting by Richard Leong.

8 Foolproof Ways to Grow Your Savings
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Durable Goods Orders Surge, Boosting Manufacturing Outlook

This is my personal favorite! Think of yourself as a regular monthly bill you have to pay. All you have to do is arrange to have a set amount of money directly deposited from your paycheck into a savings account each month.

I recommend using a separate savings account because if you have access to your funds in your checking account, you're more likely to spend them. Again, it might hurt a bit at first to take home a little less every month, but trust me, after a while you won't even notice it's gone. Here's a moment when the "set it and forget it" strategy works wonders.

It feels great to be rewarded for your hard work. And it feels even better to spend that hard-earned bonus on something you’ll enjoy, like a trip to France or an iPad. At the same time, the pleasure of a vacation or new gadget is short-lived compared to financial security.

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OK, OK, this seems like an obvious one -- and easier said than done. Actually, most people spend money on more unnecessary items than they think. So take time to look at where your money is going in detail and begin to cut back. Saving $10 here and there could help you put a lot away in the long run.
Many banks offer seasonal accounts meant to save for holidays like Christmas. These accounts give you reduced access to your accounts, charging a hefty penalty each time you withdraw more than permitted. Since emergencies don't occur often, a seasonal account could make sure you're touching it only when needed (just make sure you're not tempted to blow it all on Christmas gifts).
I love this one. Chalk it up to my massive craving for organization, but I'm all about getting rid of things I no longer use. Rather than throwing these unused goods away, start selling them, and put that money into your emergency fund. All you need to do is post them to a site like eBay or Craigslist or Amazon and you can get rid of items from the comfort of your home. You can also take your clothes to a consignment shop to have them sold for you.
Instead of saving your pennies, put aside any $5 bills that come your way. Never spend a $5 bill again, and you'll be surprised by how quickly this silly trick will help you come up with a few hundred dollars to add to an emergency fund.
You could pick up odd jobs via websites like TaskRabbit.com, DoMyStuff.com, Elance.com, FreelanceSwitch.com or Sitters.com.
If you get a cash-back reward for any spending on your credit card, just make it a rule that those dollars will be dedicated to your freedom fund. It may only add up to $100 extra each year, depending on your spending, but every little bit counts.
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