The U.S. Commerce Department reported that orders to U.S. factories increased in October, showing evidence the economy is rebounding from a spike in energy prices and the Gulf Coast hurricanes. Demand for manufactured goods rose by 2.2 percent to a seasonally adjusted $399.8 billion in October, eliminating a 1.4 percent September decline due to hurricanes, a jump in energy costs and a strike at Boeing.
The October increase was in line with economists’ expectations, with durable goods orders, increased by 3.7 percent and demand for nondurable goods rising by 0.5 percent.
In other news, the productivity of U.S. workers spiked at an annual rate of 4.7 percent in the July-September quarter, the best showing in two years. This new report from the Labor Department portrays a big upward revision from an initial estimate made a month ago that third quarter productivity was growing at a 4.1 percent rate.
Increases in worker efficiency helped push labor costs down by 1 percent at an annual rate in the third quarter, twice the 0.5 percent drop in unit labor costs originally reported. Falling labor costs and stronger productivity should help ease fears at the Federal Reserve that overall inflation was on the verge of worsening due to rising wage pressure.