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

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.

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.