Ahead of the Bell: US factory orders

US factory orders likely declined in December

Associated Press
US factory orders fell 0.7 percent in November
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FILE - In this Oct. 22, 2014 photo, Jordan Peterson, of Bellefontaine, works on an Airstream travel trailer at the Airstream factory in Jackson Center, Ohio. The Commerce Department reports on U.S. factory orders for November on Tuesday, Jan. 6, 2015. (AP Photo/Jay LaPrete, File)

WASHINGTON (AP) -- The Commerce Department releases its report on U.S. factory orders for December. The report will be issued Tuesday at 10 a.m. Eastern.

WEAK ORDERS: The expectation is that orders fell 2.2 percent in December, according to a survey of economists by data firm FactSet.

DEMAND SLOWS: Factory orders fell for a fourth straight month in November, dropping 0.7 percent, with demand in a key category that signals business investment falling as well.

The report Tuesday will cover durable goods, items expected to last at least three years, and nondurable goods such as chemicals, paper and food.

A preliminary report released last week showed orders for durable goods dropping a sharp 3.4 percent in December, the biggest decline in four months.

The December drop in durable goods orders was led by a 55.5 percent plunge in the volatile category of commercial aircraft. The weakness in a key category that serves as a proxy for business investment has raised concerns over whether companies may be pulling back on investment plans.

The government reported that the overall economy, as measured by the gross domestic product, grew by at a moderate 2.6 percent annual rate in the October-December quarter, a sharp decline from 5 percent growth in the third quarter.

Economists believe that the slowdown will be temporary and growth will accelerate this year. Consumer spending, which accounts for 70 percent of economic activity, remains strong, reflecting solid hiring and a big drop in gas prices that has provided Americans with more money to spend elsewhere.

The hope is that stronger consumer spending will be enough to offset a slowing global economy. The rising value of the dollar has made U.S. goods less competitive in key export markets that were already showing weakness.

The expectation now is that the overall U.S. economy will grow at a rate above 3 percent for all of 2015, giving the country the best annual growth in a decade.

Factory production in November surpassed its pre-recession peak, according to data from the Federal Reserve, helped by healthy gains at auto plants.

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