Factory Orders

Fresh signs of a weak housing sector and a modest drop in new orders received by U.S. factories during May implied the economy was struggling to gain momentum in the second quarter. The National Assn. of Realtors said its index of pending home sales -- a forward-looking gauge -- slumped by a sharp 3.5% in May to 97.7, its lowest level since September 2001. The steep drop came as a surprise to financial markets. Economists polled by Reuters had forecast that the May index would instead rise 0.2%.

Stock prices climbed Tuesday as investors drew confidence from a smaller-than-expected drop in factory orders and a continuing stream of acquisition activity. The market was relieved to hear from the Commerce Department that U.S. factories saw demand fall in May by only 0.5%. Most analysts had predicted a decline of more than 1%. Takeover news gave the market an extra boost as Kraft Foods said it offered $7.

New orders for long-lasting U.S.-made manufactured goods tumbled sharply in May, the government said Wednesday, raising doubts about the strength of the factory sector and business expansion plans. Orders for durable goods, items meant to last at least three years, slid a more-than-expected 2.8% after a 1.1% rise in April, a Commerce Department report showed.

Airbus racked up more orders for its A350 XWB aircraft on Wednesday, a day after U.S. rival Boeing Co. snagged the troubled jet's original launch customer for its own 787 Dreamliner. In announcements at the weeklong Paris Air Show, Airbus said it had landed orders for 166 aircraft Wednesday, bringing its haul for the first three days of the event to 548, worth $75.7 billion.

Southern California's last major airplane factory got a reprieve Tuesday as Boeing Co. announced it would keep open its Long Beach production line for the C-17 Air Force transport for at least six more months. With no new orders, the sprawling plant next to Long Beach Airport had been scheduled for closure by mid-2009 with the rollout of the last C-17. It would have dealt a major economic blow to the region.

Orders to U.S. factories posted a weaker-than-expected gain in April as declines in demand for cars, planes and boats offset strength in business investment. The Commerce Department reported Monday that factory orders increased 0.3% in April, the weakest showing in three months. Analysts had expected a 0.8% increase. Still, economists were encouraged that orders for nondefense capital goods excluding aircraft -- a category considered a good proxy for business investment -- were up a strong 2.

U.S. factory orders surged in March by the largest amount in a year, an encouraging sign that the recent manufacturing slowdown might be ending. The Commerce Department said orders rose 3.1%, primarily because of a big jump in demand for commercial aircraft. It was the biggest rise in the category that tracks business investment in new equipment in 2 1/2 years.

U.S. factory orders in January suffered the steepest drop in six years and an index of home sales fell, according to data Tuesday, highlighting weak spots in the economy that could derail its recovery. Separately, fourth-quarter U.S. worker productivity was revised sharply lower and unit labor costs soared, suggesting inflation pressure that might make the Federal Reserve wary of cutting interest rates despite worries about growth. The Commerce Department said U.S. factory orders fell 5.

Growth in the service sector slowed as expected in December and new factory orders rose at a disappointing pace the previous month, according to reports released Thursday, pointing to a slackening economy. Analysts said that although the reports painted a picture of an economy treading water, the Federal Reserve probably would hold interest rates unchanged in early 2007 as it monitored the cooling housing market for a larger-than-expected effect on growth.

With December underway, Wall Street might begin counting down the number of shopping days left -- not until the holidays but until retailers can say with certainty how the shopping season fared and whether consumer spending held up as hoped. Investors have received mixed signals on the health of retailers and consumers in general recently.