Factories Report Weaker Demand
Orders for U.S. factory goods tumbled in November as demand weakened for a broad array of items, the government said Tuesday in a report underscoring the uphill climb manufacturers face returning to health.
Factory orders fell 0.8% to $319.27 billion in November after a 1.4% rise in October, the Commerce Department said.
The decline -- the third drop in four months -- reflected weakness in most manufacturing categories and was a touch larger than the 0.6% slide expected on Wall Street. In addition, the report suggested that businesses had cut back on future spending plans.
“It reflects the fragility of the recovery,” Manufacturers Alliance/MAPI chief economist Daniel Meckstroth said. “We’re relying on consumers driving the economy.”
In a separate report, the International Strategy & Investment Group said a bounce in car and clothing sales last week drove U.S. business activity to its highest level since September, although it warned that the gains could be short-lived.
“Some of the lift may be temporary as year-end incentives boosted auto sales and clearance activity helped specialty retailers,” ISI said.
Two weekly reports on chain store sales also showed retailers closing out a disappointing holiday shopping season on a solid, if unspectacular, note.
The report on factory orders showed a 1.5% drop in demand for durable goods, costly items such as refrigerators and cars that are meant to last three years or more. Demand for nondurable items edged down 0.1%.
The manufacturing sector fell into recession before the broader economy turned down in early 2001, and it has struggled to return to full health ever since. The Commerce Department report was a reminder of that struggle.
Orders for transportation equipment fell a sharp 1.9% in November, but even excluding that sector, factory orders were off 0.7%.
The report offered only a few glimmers of light.
Defense orders were strong, helping temper the weakness elsewhere. Excluding defense, factory orders would have been off a steeper 1.3%. In addition, computers and electronic products managed a slight gain of 0.2%.
