Economy gains as businesses spend more, fire less
By CHRISTOPHER S. RUGABER and MARTIN CRUTSINGER The Associated Press January 26, 2012 6:32PM
In this Jan. 6, 2012 photo, John Deere farm tractors are displayed at Sloan's Implement John Deere Dealership, in Virden, Ill. Orders to U.S. factories for long-lasting manufactured goods increased in December after business stepped up spending on machinery and other capital goods. (AP Photo/Seth Perlman)
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Updated: February 28, 2012 8:20AM
WASHINGTON — Businesses are growing more confident in the economy, investing in more equipment and laying off fewer workers.
Government figures on manufacturing and unemployment claims released Thursday raised hopes on the eve of a report on how much the economy grew in the October-December quarter.
“Business optimism seems to be picking up, which is critical to the growth and competitiveness of the U.S. economy over the long haul,” said Diane Swonk, chief economist at Mesirow Financial in Chicago.
Orders for manufactured goods expected to last at least three years rose 3 percent last month, the Commerce Department said.
And demand for goods that indicate business investment plans hit an all-time high.
A tax break that expired in December for large equipment purchases may have helped boost orders. Still, many economists said most companies are likely buying equipment simply because business is improving.
Factories are busier in large part because businesses are ordering more communication equipment, industrial machinery and autos.
Economists pay close attention to demand for such core capital goods, which are considered a good proxy for business investment plans.
In December, orders for core capital goods rose to a record $68.9 billion. That’s more than 45 percent higher than the recession low hit in April 2009.
Companies are also laying off fewer workers, which has some economists optimistic about job growth in January.
Weekly applications rose last week to a seasonally adjusted 377,000. But that followed a week in which they fell to near a four-year low. And the longer-term trend is pointing to a healthier job market.
In another sign the economy is gaining strength, the Conference Board said its index of leading economic indicators rose in December for the fourth straight month.
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