Factory Orders in U.S. Probably Increased By Most in Two Years

By Courtney Schlisserman

Sept. 2 (Bloomberg) -- Orders placed with U.S. factories probably rose in July by the most in two years as companies tried to prevent stockpiles from dropping further, economists said before a report today.

Bookings rose 2.2 percent, the most since July 2007, according to the median projection of 63 economists surveyed by Bloomberg News. Other reports may show worker productivity climbed and job losses slowed.

Companies from Intel Corp. to Rockwell Collins Inc. are among those seeing demand stabilizing as customers here and abroad, buoyed by growing profits and more accessible credit, begin to invest in new equipment. A rebound at automakers resulting from the government’s “cash-for-clunkers” plan may give orders an added boost in coming months as dealers restock.

“Inventory levels have been worked off pretty much as far as they’re going to go,” said Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities Inc. in New York. “We should see further evidence of production picking up in the third quarter and also as we go into the fourth quarter. That’s a key development of the economy showing early signs of life.”

The Commerce Department’s report on orders is due at 10 a.m. in Washington. Estimates in the Bloomberg News survey ranged from increases of 0.6 percent to 4.5 percent.

A report from the Labor Department at 8:30 is projected to show productivity, or what each worker produces in an hour, jumped at a 6.4 percent annual pace in the second quarter, the biggest gain in almost six years.

Job Cuts

Figures from ADP Employer Services at 8:15 a.m. may show companies cut 250,000 workers from payrolls in August, down from 371,000 the prior month, according to economists surveyed.

Manufacturing, which makes up about 12 percent of the world’s largest economy, grew in August for the first time in 19 months, a report from the Institute for Supply Management yesterday showed. The group’s measure of new orders reached the highest level since December 2004.

Demand is rising after companies trimmed stockpiles at a record pace in the first half of the year. Inventories dropped at a $159.2 billion annual rate in the second quarter, the Commerce Department said last week, following a $113.9 billion decrease in the first three months of 2009.

Intel, the world’s largest chipmaker, is among companies saying customers are restocking. The Santa Clara, California- based company last week increased its sales forecast for this quarter and projected a recovery, and has credited consumers in Asia as leading the rebound in demand for personal computers.

Sales Overseas

U.S. exports in May and June showed the biggest two-month gain in almost a year.

Clayton Jones, chief executive officer at Rockwell Collins, the Cedar Rapids, Iowa-based aircraft-parts producer, said yesterday that the decline in sales is slowing.

“The bleeding is about to stop, and we’re going to see some stabilization maybe this quarter and next,” Jones said at a Morgan Stanley conference broadcast online.

Automakers are also putting more people to work. A report yesterday showed sales of cars and light trucks jumped to a 14.1 million rate, the most since May 2008.

Last month, Ford Motor Co.,General Motors Co. and Honda Motor Co. were among automakers citing the popularity of the federal cash-for-clunkers plan in announcing production increases for the coming months.

The clunkers program, which ended Aug. 24, offered auto buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles.

The Standard & Poor’s 500 index has been up for six straight months on growing optimism that the worldwide economic slump is abating. The index dropped yesterday for a third day, the longest losing streak since June, on concern banks will post more losses.

Bloomberg Survey

===============================================================
ADP Prod- Factory
Payroll uctivity Orders
,000’s QOQ% MOM%
===============================================================
Date of Release 09/02 09/02 09/02
Observation Period Aug. 2Q July
---------------------------------------------------------------
Median -250 6.4% 2.2%
Average -248 6.4% 2.2%
High Forecast -160 6.7% 4.5%
Low Forecast -396 5.8% 0.6%
Number of Participants 32 63 63
Previous -371 6.4% 0.4%
---------------------------------------------------------------
4CAST Ltd. -250 6.5% 2.2%
Action Economics -210 5.9% 2.5%
AIG Investments --- 6.6% 2.5%
Aletti Gestielle SGR --- 6.4% 3.8%
Ameriprise Financial Inc -260 6.4% 2.6%
Argus Research Corp. --- 6.4% 3.5%
Banesto -270 6.4% ---
Bank of Tokyo- Mitsubishi --- 6.6% 2.5%
Bantleon Bank AG --- --- 2.5%
Barclays Capital --- 6.4% 1.5%
Bayerische Landesbank --- --- 0.8%
BBVA -285 6.4% 1.0%
BMO Capital Markets -250 6.4% 1.8%
BNP Paribas -270 6.6% 2.3%
Briefing.com -255 6.1% 1.5%
Calyon --- 6.6% 2.5%
Capital Economics --- 6.4% 2.5%
CIBC World Markets --- 6.4% 4.5%
ClearView Economics --- 6.5% 3.0%
Commerzbank AG --- --- 2.0%
Credit Suisse --- 6.6% 2.0%
Daiwa Securities America --- 6.6% 2.0%
DekaBank --- 6.4% 1.5%
Desjardins Group --- 6.6% 3.5%
Deutsche Bank Securities --- 6.1% 0.8%
Deutsche Postbank AG --- --- 1.5%
DZ Bank -200 6.4% 1.5%
First Trust Advisors --- 6.5% 2.2%
Fortis --- 6.4% 2.0%
Goldman, Sachs & Co. --- 6.6% 2.5%
Helaba --- 6.6% 2.0%
Herrmann Forecasting -241 6.6% 2.2%
High Frequency Economics -200 6.4% 3.5%
HSBC Markets -160 6.5% 2.5%
IDEAglobal -250 6.0% 1.0%
IHS Global Insight --- 6.6% ---
Informa Global Markets -300 6.1% 1.3%
ING Financial Markets -280 6.4% 3.0%
Insight Economics --- 6.5% 2.0%
J.P. Morgan Chase --- 6.7% 2.3%
Janney Montgomery Scott L -225 6.5% 2.6%
Johnson Illington Advisor --- 6.4% ---
Landesbank Berlin --- --- 1.2%
Landesbank BW --- 6.1% 2.0%
Merrill Lynch/BAS -250 6.4% 0.6%
MFC Global Investment Man -250 6.1% 1.5%
Moody’s Economy.com -290 6.6% 2.0%
Morgan Keegan & Co. --- --- 1.1%
Morgan Stanley & Co. --- 6.6% 2.0%
Natixis -190 --- ---
Newedge --- 6.0% ---
Nomura Securities Intl. -200 6.4% 2.5%
Nord/LB -260 6.1% 2.7%
PNC Bank --- 6.2% 2.6%
Raymond James --- 6.6% 2.2%
RBC Capital Markets --- 6.4% ---
RBS Securities Inc. --- 6.6% 2.1%
Ried, Thunberg & Co. -250 6.5% 2.0%
Scotia Capital -250 6.1% 2.5%
Societe Generale --- 6.4% 2.9%
Standard Chartered -220 6.2% ---
Stone & McCarthy Research --- 6.4% 3.7%
TD Securities -225 --- ---
Thomson Reuters/IFR -260 6.6% 3.2%
UBS --- 6.4% 2.0%
Union Investment -240 --- ---
University of Maryland -250 5.8% 1.2%
Wells Fargo & Co. --- 6.0% 2.6%
WestLB AG -250 6.1% 1.2%
Westpac Banking Co. --- 6.4% 3.5%
Woodley Park Research -396 6.6% 2.5%
Wrightson Associates -250 6.5% 2.0%
===============================================================

To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net
Last Updated: September 2, 2009 00:00 EDT