The Commerce Department reported factory goods orders up by 1.2 percent in January. That increase followed a similar increase of 1.3 percent in December. The two data points signal that the recovery in the manufacturing sector is accelerating due to the rise in prices for commodities fuel a greater demand for machinery.
Factory orders are up by 5.5 percent compared to a year ago, while total shipments of manufactured items rose by 0.2 percent after a strong showing of 2.5 percent in December.
Manufacturing is an important factor when assessing overall economic strength in the US, as it accounts for about 12 percent of the overall economy. The data suggests that the economy is recovering from the pounding it took due to rock-bottom oil prices, a strong dollar, and an inventory lag.
The early stages of this recovery were highlighted by a poll conducted last week which showed that the country’s factory activity climbed to a 2.5 year high in February. In addition, there are hopes that promises made by the Trump administration for tax reform, including corporate tax cuts, could add to the economic upturn. Confidence is up although the prospect of future tax cuts has not yet translated into a stronger investment in capital goods.
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