Factory Orders, Home Sales Dip in September

New orders received by U.S. factories fell 1.9% in September while sales of new homes tumbled 7.8%, the government said today in its latest affirmation that the once-hot economy is cooling off.

Factory orders, a leading indicator of the nation’s industrial strength, fell to a seasonally adjusted $222.62 billion in September after rising 3.2% in August, the Commerce Department said.

Factory orders have been see-sawing from month to month since last spring, largely because of wide swings in orders for big items like aircraft, ships and fleets of cars.

While the September decline reflected a drop in orders for those big items, it also touched nearly every manufacturing sector and was especially significant in non-defense capital goods orders, a gauge of business spending on new equipment.

Despite the 1.9% September drop, orders were still 9% higher than in September of 1987.

Manufacturing firms have enjoyed brisk foreign sales this year because of the competitive edge they have gained from the cheap dollar, but export growth is now starting to slow.

In another sign of the economy’s weakness, the Commerce Department said that single-family home sales, after three stronger-than-expected months, fell to a seasonally adjusted annual rate of 659,000 units in September.

The drop was the largest since May, 1987, but still leaves sales 2.3% above the year-ago pace. Economists said the housing market is in a long-term declining trend.

Regionally, sales fell 12.7% in the Northeast and 27.8% in the South, but rose 1.1% in the Midwest and 17.3% in the West.