Factory Orders Take Steepest Dive in 6 Years

Orders to U.S. factories plummeted 3.6% in October, the sharpest nose dive in more than six years, as the long-awaited rebound for American manufacturers remained elusive. Some analysts expressed renewed fears of a possible recession.

The Commerce Department said orders for manufactured goods totaled $192.3 billion in October, compared to a September level of $199.4 billion.

It was the biggest decline since a 4.5% plunge in May, 1980, when the country was in the midst of a recession.

Much of the weakness stemmed from a big drop in orders for military equipment, which fell 42% in October to a level of $5.1 billion. It was the biggest decline in defense orders since February, 1985.

Civilian Orders Down

In the civilian categories, orders were down by 1.8%, the biggest drop since a 4.6% fall in March.

The Reagan Administration has been hoping that improvements in the country’s huge trade deficit would translate into increased demand for domestic goods. But so far this change has not shown up in the orders report.

The key category of non-defense capital goods suffered a 4.8% decline in October. This category is closely watched for signals it can give of industry plans to expand and modernize production facilities.

The 3.6% decline in overall orders in October erased a 3.4% September increase.

Most of the $7.1-billion decline was in orders for durable goods, items expected to last three or more years. These orders fell by 5.6%.

Orders for non-durable goods dropped 1.8%, erasing a 1.9% increase of the month before.