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Archive for Wednesday, December 7, 2005

Economic reports signal rebound

U.S. factory orders, productivity increase

December 7, 2005

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— Orders to U.S. factories posted a solid increase in October while worker productivity jumped by the largest amount in two years, the government reported Tuesday.

It was the latest evidence that the economy is rebounding from the Gulf Coast hurricanes and a spike in energy prices, leading analysts to predict the economy will turn in a solid performance in coming months.

"The momentum of growth has been very strong," said Nariman Behravesh, chief economist at Global Insight in Lexington, Mass. "This suggests that growth in the fourth quarter of this year and early next year will remain robust."

The Commerce Department said that demand for manufactured goods rose by 2.2 percent to a seasonally adjusted $399.8 billion in October, erasing a 1.4 percent September decline when demand was jolted by the hurricanes, a strike at aircraft giant Boeing and a jump in energy costs.

The October increase was in line with economists' expectations. Orders for durable goods, items expected to last three or more years, increased by 3.7 percent while demand for nondurable goods rose by 0.5 percent.

Meanwhile, the Labor Department reported that the productivity of American workers shot up at an annual rate of 4.7 percent in the July-September quarter, the best showing in two years. The new figure was revised upward from an initial estimate of 4.1 percent growth in productivity.

The big jump in worker efficiency helped to push labor costs down by 1 percent at an annual rate in third quarter, double the 0.5 percent drop in unit labor costs that had originally been reported.

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