Factory Orders Up Only 0.1% in November

Orders to U.S. factories edged up 0.1% in November, the weakest showing in three months, the government said Thursday in a report that prompted some concern about a possible slowdown in manufacturing following the October stock market collapse.

The Commerce Department said orders for both durable and non-durable goods rose to $209.66 billion in November after increases of 1.3% in October and 1.8% in September.

The November gain was the poorest performance since orders fell 1.4% in August, which was only the second decline this year.

Some economists said they were particularly concerned about an 18.5% plunge in orders for computers and other office equipment, suggesting this may reflect concerns on the part of businesses about the impact of the record Oct. 19 drop in stock prices.

“That decline could be an early warning signal,” said David Wyss, an economist with Data Resources Inc. in Lexington, Mass.

“Personal computers have about the shortest lead-time of any investment good. It is an easy place to cut back if you are nervous,” he said.

The fall in computers contributed to a 2.4% decline in the overall business investment category of non-defense capital goods, a setback analysts said would be worrisome if it continues.

Economists are pinning most of their hopes on the ability of the economy to avoid a recession in 1988 on continued strong growth in business investment and export sales, two bright spots in the economy in 1987.

Lawrence Chimerine, chairman of the Wefa Group, formerly Wharton Econometrics, said he did not find the one-month drop in business investment orders particularly worrisome.

He said the overall orders figures were still at relatively high levels, reflecting the boost U.S. manufacturers have received all year long from a weaker dollar, which has made their products competitive once again on overseas markets.

“This report is consistent with a pattern of exports improving while the domestic economy has been slowing. It will be a tug-of-war between those two forces to see which wins out next year,” Chimerine said. “I think we will squeak through without a recession, but the risk of one is quite high.”

The strength in exports has helped push total orders up by 7.2% in the first 11 months of 1987, compared to a 0.6% decline in manufacturing orders for all of 1986.