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P. M. BRIEFING : Factory Orders Fall 2.5% in May; Worst Setback Since July, 1988

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<i> From Times wire service</i> s

Orders to U.S. factories for manufactured goods fell 2.5% in May, the biggest percentage drop in 10 months and further indication that the economy is slowing, the government reported today.

The Commerce Department said orders for durable and non-durable goods fell to a seasonally adjusted $234 billion last month after rising 3% in April and 0.7% in March. Orders had fallen the first two months of the year.

It was the steepest decline since orders fell 3.6% in July, 1988.

The May setback heightened concerns about possible layoffs in the manufacturing sector if producers are forced to cut back in the face of declining demand.

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Many economists are predicting that unemployment will rise this year because of a weakening economy. However, most analysts still believe that the downturn will not worsen into a recession.

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