U.S. factory activity grew in October for a second straight month, according to the Institute for Supply Management closely watched manufacturing survey. But regional surveys indicated manufacturing shrank this month in the Philadelphia and New York regions, partly reflecting damage from Superstorm Sandy that disrupted area factories.The storm may have also weighed on durable goods orders in October, although most economists expect the storm's impact to fade in the coming weeks. The economy is expanding at a modest pace. Many economists now predict growth at an annual rate of roughly 3 percent in the July-September quarter, up from the initial estimate of 2 percent reported last month. The government releases its second estimate for third-quarter growth on Nov. 29. Still, many economists say the economy is growing in the current October-December quarter at an annual rate below 2 percent. That's too slow to make much of a dent in the unemployment rate, which was 7.9 percent last month.
WASHINGTON (AP) â¿¿ Companies have held back this year on key purchases of machinery and equipment that signal investment plans. Their more cautious approach has slowed U.S. economic growth since the spring. A report Tuesday will provide some indication if that trend continued in October. Superstorm Sandy may have also slowed orders on the East Coast in the final days of the month. Economists expect overall orders for long-lasting manufactured goods dropped 1 percent last month, according to a survey by FactSet. The Commerce Department will release the report at 8:30 a.m. EDT Tuesday. Orders for durable goods increased 9.8 percent in September, mostly because of a surge in volatile aircraft demand. Durable goods are items expected to last at least three years. Economists looked past the increase last month and focused on continued weak demand for so-called core capital goods. Those orders, which signal investment plans, barely increased in September and August after steep declines in July and June. For the July-September quarter, business investment in equipment and computer software was flat. That's the weakest performance since the spring in 2009, when the country was in recession. Many businesses are holding back because they are worried about tax increases and federal spending cuts â¿¿ known as the "fiscal cliff" â¿¿ that will take effect in January unless Congress reaches a budget deal before then. Most economists predict the economy will suffer a recession in the first half of 2013 if lawmakers and President Barack Obama can't avoid the fiscal cliff. White House economists on Monday warned that the uncertainty of a potential hike in taxes next year for middle class taxpayers could hurt consumer confidence and spending during the crucial holiday shopping season. Businesses have also grown more cautious because Europe's financial crisis has pushed many countries in the region into recession. That has cut into U.S. exports and corporate profits. Growth has also slowed in China, Brazil and other big developing nations which are major markets for American exports.