The Economy: Factory Orders Slide

Indicator: Orders received by U.S. factories.

* What it did: Orders fell 1.7% in September, largely because of lower demand for durable goods and defense items. Orders fell a revised 2.0% in August, rather than the 1.9% previously estimated.

* What it means: Analysts say it is the latest report to show a persistent sluggishness in the economy. September’s decline in orders was steeper than the 1.4% drop forecast by economists, not a heartening indicator with unemployment above 6%. But there was also an early sign that manufacturers might be starting to rebuild inventories after an extended drawdown of their stocks of unsold goods. David Wyss, an economist with DRI/McGraw Hill Inc. in Lexington, Mass., said the rise in inventories was significant. “But it’s a little worrisome for the future because it suggests factories may need to produce less in the fourth quarter.”

* Highlights: Durable goods, a key component of factory orders, fell 3.2% after a 4.1% drop in August. Orders for defense goods, a volatile category subject to wide monthly swings, plunged by 47.8% after increasing by 15.1% in August. Excluding defense, factory orders rose 0.4% in September after decreasing 2.7% in August. Orders for non-defense capital goods, a measure of business’ expansion plans, decreased by 0.7% in September after a fall of 15.5% in August.

Total new factory orders

In billions of dollars, seasonally adjusted Sept. ‘91: 239.0 Aug. ‘91: 243.2 Sept. ‘90: 249.0

Source: Commerce Department