New orders for U.S.-made goods increased more than expected in October and businesses spending on equipment appeared to rebound after declining in the third quarter.
The Commerce Department said on Friday that factory orders increased 1.0% in October. Data for September was revised higher to show orders gaining 0.5% instead of 0.2% as previously reported. Economists poll had forecast factory orders rising 0.5%.
Orders increased surged 17.1% on a year-on-year basis.
Manufacturing, which accounts for 12% of the economy, is being driven by still-strong demand for goods despite spending shifting back to services. Businesses are rebuilding depleted inventories, but shortages of labor and raw materials stemming from the COVID-19 pandemic remain challenges.
An Institute for Supply Management survey on Wednesday showed manufacturing activity picked up in November, noting “some indications of slight labor and supplier delivery improvement.”
Shipments rose 2.0% after advancing 1.0% in September. Inventories at factories gained 0.8% in October. Unfilled orders rose 0.3% after increasing 0.7% in the prior month.
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 0.7% instead of 0.6% 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 0.4%. They were previously reported to have increased 0.3%.
That suggests a potential rebound in business spending on equipment after it contracted in the third quarter after four straight quarters of double-digit growth, though inflation could cut into the gains.