Although December’s factory orders increased by 1.8 percent, economists were expecting a 2.2 percent rise. On Monday, the Commerce Department’s Census Bureau released its report on Manufacturers’ Shipments, Inventories and Orders for December (also known as the “factory orders” report.)  Although economists were expecting the report to indicate a 2.2 – 2.3 percent increase in factory orders between November and December, the actual increase was 1.8 percent. The report disclosed that orders for so-called, “core capital goods” (non-defense capital goods excluding aircraft) made a slight decline of 0.3 percent in December after November’s 3.3 percent advance.  Orders for core capital goods are closely followed because they are seen as a signal for future business investment plans.  A more significant capital outlay conveys expectations for business expansion.  Money spent on planned business expansion speaks much louder than answers to survey questions about how factory managers believe their businesses are performing. Orders for durable goods, items expected to last at least three years or more, increased by 4.3 percent, falling short of the estimated 4.6 increase indicated in the preliminary report.   An Insider’s Take on the Complicated Graphite Market During calendar year 2012, factory orders increased by 3 percent to $5.66 trillion.  This represented a significant slowdown from November’s 11.8 percent jump.   ISM Manufacturing Business Activity Has Strong Advance Because orders for aircraft are excluded from the core capital goods computation, it is noteworthy that in December, orders for commercial aircraft increased by slightly more than ten percent while orders for military aircraft increased by over 56 percent. From the report: New orders for manufactured goods in December, up three of the last four months, increased $8.6 billion or 1.8 percent to $484.8 billion, the U.S. Census Bureau  reported today.  This followed a 0.3 percent November decrease.  Excluding transportation, new orders increased 0.2 percent.   S hipments, up five of the last six months, increased $1.8 billion or 0.4 percent to $484.9 billion.  This followed a 0.3 percent November increase. Unfilled orders, up six of the last seven months, increased $7.9 billion or 0.8 percent to $991.7 billion.  This followed a slight November increase.  The unfilled orders-to-shipments ratio was 6.12, down from 6.13 in November. Inventories, up following two consecutive monthly decreases, increased $0.5 billion or 0.1 percent to $615.5 billion.  This followed a slight November decrease.  The  inventories-to-shipments ratio was 1.27, unchanged from November. The major ETFs expected to respond to the December factory orders report are: iShares Dow Jones US Industrial ETF (NYSEARCA:IYJ):  -1.09% Vanguard Industrials Index ETF (NYSEARCA:VIS):  -1.07% Materials Select Sector SPDR ETF (NYSEARCA:XLB):  -0.96% Technology Select Sector SPDR ETF (NYSEARCA:XLK):  -1.31% iShares Russell 2000 Index ETF (NYSEARCA:IWM):  -1.26%   Learn More About iShares ETFs Bottom line:  December’s factory orders increased by approximately one-half of a percentage point less than the anticipated 2.2 – 2.3 percent.  Orders for core capital goods, which are seen as signals of future business expansion, actually declined in December by 0.3 percent. Sign up for Wall Street Sector Selector’s FREE Stock Market Timing Indicator!    Disclaimer: The content included herein is for educational and informational purposes only, and readers agree to Wall Street Sector Selector’s Disclaimer , Terms of Service , and Privacy Policy before accessing or using this or any other publication by Wall Street Sector Selector or Ridgeline Media Group, LLC.