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U.S. factory orders flat, but gauge of confidence firm

In this file photo, Boeing employees work on the 777 airplane assembly line.

Ted S. Warren/Ted S. Warren/AP

New orders received by U.S. factories were flat in November, missing expectations as demand for aircraft sank sharply, although a gauge of business spending plans still gave a positive sign for the economy.

The Commerce Department on Friday said orders for factory goods were unchanged after gaining 0.8 per cent in October. Analysts polled by Reuters had expected a 0.4 per cent increase in November.

Manufacturing, the pillar of the recovery from the 2007-09 recession, has lost momentum in recent months as fears of the "fiscal cliff" and slowing global demand slammed the economy.

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However, there was little sign in the factory report that worries over planned austerity measures were leading businesses to cut back on investment plans.

Orders for non-defense capital goods excluding aircraft – seen as a measure of business confidence and spending plans – increased 2.6 per cent in November, a slight downward revision from an initial estimate released last month but still a healthy gain.

November's factory orders suggested that manufacturing was not heading for a hard landing, even though factories are struggling to regain momentum.

The Institute for Supply Management said on Wednesday its index of national manufacturing pointed to a return to growth in December after factory activity contracted in November.

Weighing on overall factory orders, orders for transportation equipment, a volatile category, fell 1 per cent in November on weak civilian and defense aircraft. Orders for motor vehicles and parts rose 2.8 per cent.

Factory goods orders excluding transportation rose 0.2 per cent.

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