Ahead of the Bell: Factory orders

WASHINGTON - Factory orders are expected to show a gain in September in a further sign of a revival in manufacturing that should help support the overall economy.

Economists surveyed by Thomson Reuters expect orders to U.S. factories grew 0.8 percent in September, reversing a decline of that amount in August. The Commerce Department is scheduled to release the report at 10 a.m. EST Tuesday.

The report will cover orders for durable goods, big-ticket items expected to last at least three years, and nondurable products such as chemicals, paper and energy products. The government last week issued an advance look at durable goods orders which showed they increased 1 percent in September, the second advance in three months.

The Institute for Supply Management on Monday said its gauge of manufacturing activity grew in October at the fastest pace in more than three years. It was driven by businesses' replenishing of stockpiles, higher demand for American exports and support from the government's $787 billion stimulus program.

The ISM index rose to 55.7 in October, the third straight reading above 50, which signals growth in the sector. But with jobs scarce, lending tight and consumers wary of spending, it's unclear whether the gains can be sustained as government stimulus programs wind down.

The ISM, a trade group of purchasing executives, also said its index showed manufacturing employment grew for the first time in 15 months, rising to 53.1 last month from 46.2. But the measure tracking new orders, a signal of future production, slipped in September.

Farm and construction equipment makers Deere & Co. and Caterpillar Inc. said last week they each were adding back a few hundred jobs, and Kemet Corp., which makes parts for electric drive vehicles and alternative energy markets, is adding 113 jobs in South Carolina because of a $15.1 million grant from the Department of Energy that is enabling it to transfer some manufacturing from Europe to the U.S.

But layoffs continue. Sun Microsystems Inc. said in October it plans to eliminate up to 3,000 jobs before it's acquired by Oracle Corp.

In October, the ISM said 13 of the 18 manufacturing industries surveyed expanded, led by petroleum and coal production, apparel and furniture. Three industries shrank.

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