Manufactured Goods Orders Slip in October

Orders to U.S. factories for manufactured goods fell 0.2% in October to their lowest level since July, the government reported today.

The Commerce Department said orders for both durable and nondurable manufactured goods totaled a seasonally adjusted $233.9 billion following a 1% decline in September.

The September report was revised downward from the flat level of orders originally reported last month.

Orders in October were at their lowest level since $230.4 billion were posted in July.

The report was the latest indicator showing the economy slowing as the year draws to an end. The manufacturing sector has been particularly weak, prompting concern of possible layoffs and a rise in the unemployment rate.

As a result, some analysts and government officials have urged the Federal Reserve Board to lower interest rates further. The Fed began raising rates a year ago to slow the economy and thus contain inflation. It has permitted rates to fall gradually since the beginning of the summer.

October orders were 2.5% below the record of $239.9 billion set last April.

But large swings in defense orders the last two months had a strong influence on the change in orders, the Commerce Department said. Excluding defense, new orders were up 0.3% in October and down 2.2% in September.

Shipments of manufactured goods fell 0.6% to $232.2 billion, while inventories rose 0.3% to $371.9 billion.

If inventories increase without a corresponding gain in new orders, it could signal production cutbacks in the future as factories attempt to get rid of goods on shelves and back lots.

Orders for durable goods--big-ticket items expected to last more than three years--fell 1.3% to $123.6 billion. The machine industries accounted for most of the decline.