WASHINGTON (AP) – Big-ticket orders to factories shot up almost 11 percent last year, the best performance in a decade and a promising sign for beleaguered manufacturers who have lost 2.9 million jobs since mid-2000.

But the rebound in orders, while translating into higher profits for manufacturing companies, was not spurring much rehiring of laid-off workers. Businesses are boosting production with smaller work forces, analysts say.

The 10.9 percent rise in orders for all of 2004 was helped by a 0.6 percent gain in December, which followed an even bigger 1.8 percent November increase as the year ended on a strong note.

“Manufacturing came back later in this expansion than it normally does. But last year, it looks like it finally came back,” said David Wyss, chief economist at Standard & Poor’s in New York.

The annual increase in orders was the biggest since an 11.8 percent jump in 1994 in the midst of the booming economy of the 1990s. In this decade, manufacturing has fallen on hard times, suffering a plunge of 10.6 percent in orders in the recession year of 2001 and a further 1.9 percent setback in 2002. Orders rose a modest 3 percent in 2003, not enough to recoup the losses of the previous two years.

The strong manufacturing gain was not enough to bolster spirits on Wall Street, where investors worried about rising oil prices and the upcoming elections in Iraq. The Dow Jones industrial average fell 31.19 points to close at 10,467.40.

In other economic news, the Labor Department said 325,000 newly unemployed Americans filed claims for jobless benefits last week, an increase of 7,000. Claims in the previous week had fallen by the largest amount in more than three years.

Analysts were encouraged by the strong 2004 factory orders, noting that they reflected in part heavy demand for business capital goods, an area that is closely watched for business plans to expand and modernize. It is this part of the economy that is expected to provide momentum for economic growth this year.

“A continued resurgence in business capital spending is critical for the manufacturing recovery in 2005,” said David Huether, chief economist for the National Association of Manufacturers.

But economists cautioned that the rebound in orders probably will not translate into a surge in hiring. Manufacturing employment’s most recent peak occurred in July 2000. Since that time, 2.9 million manufacturing jobs – one in six – have disappeared as U.S. companies have been battered by increased competition from low-wage nations.

Manufacturing employment did post a small increase of 76,000 jobs for all of last year, but that did little to dent the heavy losses in earlier years.

One of the factors at play is a strong boom in productivity as U.S. companies have found ways to get more production out of their existing employees, which has meant they have been slow to rehire workers even though orders are rebounding.

That situation is not expected to reverse quickly, although many economists are predicting continued moderate increases in manufacturing employment this year as U.S. companies reap the benefits of a falling dollar, which makes imports more expensive to U.S. consumers and their goods more competitive on overseas markets.

“What the manufacturing industry needs to maintain the strong momentum is for the rest of the world to grow, invest and buy our exports; the dollar to continue to decline in value … and stable energy prices,” said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI, another industry trade group.

The 0.6 percent rise in orders for December was led by a 6.4 percent jump in demand for computers and other electronic products, a category that covers communications equipment, which was up 17.8 percent after a big drop the previous month.

The overall gain came despite a 3 percent decline in transportation, reflecting big decreases in demand for both civilian and military aircraft. Excluding the volatile transportation sector, new orders were up 2.1 percent in December following two straight months of declines.

Orders for all durable goods totaled $200.3 billion in December after adjusting for normal seasonal variations.