FILE PHOTO: United Auto Workers union member Carrie Attwood uses an ergonomic-arm to install a front seat in a Chevrolet Volt electric vehicle at General Motors Detroit-Hamtramck assembly plant in Hamtramck, Michigan July 27, 2011. REUTERS/Rebecca Cook
“Business demand for new equipment is booming but Fed officials know that until companies start to rehire workers, the economic recovery will be incomplete,” said Chris Rupkey, chief economist at MUFG in New York. Manufacturing, which accounts for 11.9% of the economy, is also being supported by businesses rebuilding depleted inventories. In December, core capital goods orders were lifted by demand for machinery and primary and fabricated metal products. But orders for computers and electronic products fell while bookings for electrical equipment, appliances and components barely rose.
“Factory activity saw a quicker-than-expected recovery and should remain well supported in the near-term as businesses restock inventories and consumers continue to spend on consumer goods,” said Lydia Boussour, lead U.S. economist at Oxford Economics in New York. Business investment on equipment rebounded strongly in the third quarter after five straight quarterly declines. Regional manufacturing surveys have suggested that the strength in business investment could be sustained in the near term.