Factory Orders Reveal that U.S. Investment Edged Lower in December

The Factory Orders Report released by the U.S. Department of Commerce on Monday was packed with useful economic information. The Factory Orders Report is a tool that investors can use to develop their understanding of the economic environment against which they have to make investment decisions. If all the indicators say growth, then the rotation into equities makes sense as corporate profits are bound to rise. If all the indicators say sluggishness, then the bond market gets a lot of attention.

If the indicators are mixed, then the value of reading details increases. So let’s cut through the fat — the obvious stuff — quickly and get to a small piece of pessimistic news buried below the headlines.

Overall, new orders for manufactured goods increased 1.8 percent in December to $484 billion. This is below estimates for 2.4 percent growth, but a marked improvement over November’s 0.3 percent contraction. This gain was led by an 11.7 percent increase in orders for manufacturing equipment to $75.6 billion. Factoring out transportation equipment orders, which usually swing pretty wildly, new orders increased 0.2 percent.

The factory sector may no longer be the economy’s primary engine, but it’s definitely plugging along.