February 4, 2002,
Durable goods see gains
In one more signal that a slumbering U.S. economy may be turning around, durable goods orders jumped up 2.0 percent in December, the Commerce Department reported, back on track after a steep 6.0 percent drop in November.
Excluding highly volatile defense-related items, orders still rose by 1.7 percent, up from a revised reading of 1.5 percent in November.
Excluding the similarly volatile transportation sector — easily skewed by car and airplane orders — sales of durable goods moved up by 1.4 percent, reversing a 1.1 percent decline the previous month.
Sales of durable goods include products made by U.S. factories — ranging from toasters to tractors — designed to last for more than two years.
Among the big gainers in manufacturing were semiconductors, up 13.3 percent; defense capital goods, up 10.8 percent; and computers and electronics, up 3.5 percent.
The December spike is good news for a manufacturing sector that has been mired in recession for the past 17 months, after a capital spending boom in the late 1990s led to excess and soaring stockpiles, when the broad economy slowed and then staggered.
The December gain marks the second increase in orders for durable goods during the past three months, suggesting the manufacturing sector may finally have reached bottom.
In a related piece of good news, the Commerce Department also reported that inventories at U.S. factories fell for an 11th straight month, declining by 0.4 percent, to $284.7 billion. As stockpiles are worked off, companies generally step up capital spending and production.
Mohawk makes Forbes list
Mohawk Industries, Calhoun, GA, the diversified carpeting and home fashions producer, has been selected to Forbes magazine's Platinum 400 list for a fourth straight year.
The Forbes ranking measures public companies in 23 broad industry sectors by key performance metrics, including overall sales, earnings per share and return on capital.
Other notable performers in the Household Products segment include Newell Rubbermaid, Colgate-Palmolive, Polo Ralph Lauren, Nike and Proctor & Gamble.
Bond defaults hit record mark
With the worldwide economy struggling through a major slowdown — for some economies a full-blown recession — bond defaults among major companies more than doubled last year, rising to record levels, said Moody's Investors Service, a major corporate credit rating agency.
Moody's said 253 companies worldwide defaulted on $110.2 billion of bonds last year, up from 167 companies that defaulted on just $42.3 billion in 2000.
Moody's said last year's default rate of 10.2 percent fell just short of a record of 10.5 percent set in 1991 during the last recession.
U.S. companies led the list, with 182 defaulting on $86.3 billion worth of debt, according to Moody's, driving the U.S. default rate up to 11 percent, tying a record set in 1991.
Moody's said it expects the default rate to peak near 10.5 percent by March, and ultimately to decline to 7.2 percent for all of this year.
Moody's said the current spate of defaults is flushing out a glut of debt racked up by weak companies during the late 1990s.
Among the largest U.S. defaults were energy trader Enron; financial services company Finova; two California utilities, Pacific Gas & Electric Co. and Edison International. All three have sought bankruptcy protection.