Orders to U.S. Factories Probably Rose as Fuel Prices Jumped
Orders placed with U.S. factories probably rose in May as the surge in oil prices kept refineries busy, economists said before a report today.
Orders climbed 0.5 percent after a 1.1 percent gain in April, according to the median forecast in a Bloomberg News survey of 68 economists before a Commerce Department report. Separate figures may show private payrolls fell in June.
Preliminary figures last week showed orders for long-lasting items such as metals, machinery and automobiles stagnated in May, indicating businesses are cutting back on spending. Growing demand from overseas is one of the few things preventing steeper declines at American factories.
“Higher prices of petroleum-related products are likely to pull the value of nondurable goods higher,'' said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. “The tone in the manufacturing sector remains soft.''
The Commerce Department's report is due at 10:00 a.m. in Washington. Estimates in the Bloomberg survey ranged from a decline of 0.7 percent to a 1.7 percent gain.
At 8:15 a.m., ADP Employer Services may report companies cut 20,000 workers from payrolls in June after a 40,000 gain the prior month, according to the survey median. Forecasts ranged from a drop of 90,000 to an increase of 50,000.
The ADP figures, which don't include government jobs, may underscore the weakening labor market that's been reflected in the Labor Department's payrolls report. The government's June jobs figures are due tomorrow.
Factory Survey
A report yesterday showed manufacturing unexpectedly grew in June, even as a measure of raw-material costs jumped to a 29-year high. The Institute for Supply Management's factory index rose to 50.2 from 49.6 in May. It was the first reading above 50, the dividing line between expansion and contraction, since January.
The gain was paced by increases in measures of inventories and supplier deliveries. Orders from overseas grew, even as overall bookings slowed for a seventh month.
Some companies are benefiting from the jump in fuel prices. Cameron International Corp., the second-largest U.S. maker of oilfield equipment by market value, said last week it got a contract worth about $100 million to supply undersea equipment to Brazil's Petrobras Brasileiro SA.
Orders for durable goods, which make up just over half of total factory demand, were unchanged in May after a 1 percent drop in April, a Commerce report showed on June 25. Excluding demand for transportation equipment, which tends to be volatile, bookings fell 0.9 percent, the first drop in three months.
Less Investment
Companies are trimming investments on growing concern that consumer spending will falter as gasoline prices soar, home values drop and the economy loses jobs.
For now, the government's tax-rebate checks have boosted purchases of furniture, clothing and electronics, helping to keep the economy growing.
The rebates haven't been a boon for automakers. General Motors Corp., Toyota Motor Corp. and Ford Motor Co., the biggest auto retailers in the U.S., yesterday said June sales plunged as fuel prices above $4 a gallon drove consumers away from gas- guzzling trucks.
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