By Courtney Schlisserman Dec. 4 (Bloomberg) -- Orders placed with U.S. factories rose in October for the sixth time in the past seven months, propelled by gains in non-durable goods that overshadowed declines in spending on new equipment. The 0.6 percent increase in bookings compared with a revised 1.6 percent gain for September that was larger than previously estimated, data from the Commerce Department showed today in Washington. Demand for non-durables such as petroleum and food, which often reflects changes in prices, rose 1.6 percent, while bookings for durable goods fell 0.6 percent. Businesses are reluctant to boost investment and production on equipment such as computers and machinery on concern that consumer spending will be slow to recover. Another report today showing the economy last month lost the fewest jobs since the recession began and unemployment unexpectedly dropped, signal that companies may be starting to gain confidence. “Manufacturers remain cautious about building inventories,” Zach Pandl, an economist at Nomura Securities International Inc. in New York, said before the report. “The fact firms aren’t ramping up production very aggressively means firms are thinking sales growth will be only moderate.” Employers cut payrolls by 11,000 workers, less than the median estimate of economists surveyed by Bloomberg News, figures from the Labor Department showed today. The jobless rate declined to 10 percent. Forecasts Economists forecast orders would be unchanged after a previously reported 0.9 percent increase in September, according to the median of 62 projections in a Bloomberg News survey. Estimates ranged from a decline of 1 percent to a 1 percent gain. Excluding demand for transportation equipment, which tends to be more volatile, orders increased 0.5 percent, the fifth gain in the past six months. The drop in orders for durable goods, which make up less than half of total factory demand, was the same as the government estimated previously. Bookings for capital goods excluding aircraft and military equipment, a measure of future business investment, decreased 3.4 percent, a bigger decline than the government estimated last week. Shipments of those goods, used to calculate gross domestic product, fell 0.3 percent, also a bigger drop that initially reported. The gain in non-durable demand may reflect prices. Crude oil on the New York Mercantile Exchange averaged $75.82 a barrel in October, up from $69.47 a month earlier. Prices have continued to rise. Factory Recovery Manufacturing is one of the areas leading the economy out of the worst recession since the 1930s and business demand is needed to sustain that growth. The economy grew at a 2.8 percent annual pace in the third quarter and economists surveyed by Bloomberg News earlier this month project it will grow at a 3 percent rate the final three months of the year. Factory conditions were “on balance, steady to moderately improving across most of the country,” the Federal Reserve said Dec. 2 in its Beige Book survey covering October to mid- November. The economy expanded “modestly” across the U.S. and labor and commercial real estate markets remained “weak.” One bright spot in the report is that factory inventories may be starting to climb. Today’s report showed stockpiles increased 0.4 percent, the biggest gain since August 2008. Manufacturers had enough goods on hand to last 1.34 months at the current sales pace, the lowest level since October 2008. Lean stockpiles are one of the reasons some factories are growing. A report Dec. 1 from the Institute for Supply Management showed manufacturing in November expanded for a fourth straight month, while its measure of new orders improved and inventories dropped. “We exited the year pretty low on inventory -- we saw higher demand for printers as we went through the end of the year,” Hewlett-Packard Co. Chief Executive Officer Mark Hurd said in an interview Nov. 23. Hewlett-Packard reported personal- computer sales for its fiscal fourth quarter that topped some analysts’ estimates. Deere & Co., the world’s largest maker of farm equipment, said Nov. 25 that retail sales of its machines to farmers were better than expected last month. “As we moved out of October and into November we have seen actually a pickup in the pace of retail activity and it actually influenced our outlook a bit,” Marie Ziegler, vice president of investor relations, said today on a conference call with analysts and investors. “So we’re maybe a little more positive than we would have been a few weeks ago.” To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net.

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