- The Washington Times - Wednesday, December 25, 2002

ASSOCIATED PRESS
The nation's manufacturers stumbled in November as orders to U.S. factories for big-ticket goods took an unexpected dip, evidence that the national economy still is going through a rough patch.
The Commerce Department reported yesterday that orders for durables, costly manufactured products expected to last at least three years, fell 1.4 percent in November from the previous month.
The drop came after a 1.7 percent rise in orders in October and marked the weakest showing since September, when orders plunged 4.6 percent.
November's decline surprised economists, who had forecast an increase in orders of 0.8 percent.
"Manufacturing in general is flat," said economist Clifford Waldman, president of Waldman Associates. "It is at the 50 yard line, if you will."
Manufacturing has been the weakest link in the national economy's recovery.
After staging a decent comeback at the beginning of the year, factory activity has struggled in recent months. Manufacturers continue to slash jobs.
"The U.S. economy has been working its way through a soft patch," Federal Reserve Chairman Alan Greenspan said in a speech last week. Manufacturing, he said, remains especially weak.
While consumers have carried the economy all year, businesses' shoulders have been far less broad.
Companies haven't made big capital investments and haven't been in a rush to hire because their profits haven't recovered from the big hit they took during last year's recession, and they face economic uncertainties, including war with Iraq.
A sustained turnaround in capital investment is considered a necessary ingredient to the economy's return to full throttle, economists say.
"Businesses apparently remain cautious about long-term commitments," said Maury Harris, chief economist at UBS Warburg. "Broadly speaking, investment spending is roughly flat."
The Federal Reserve held a key interest rate steady this month at a 41-year low of 1.25 percent. Economists believe the Fed will leave short-term rates at that level at its next meeting in late January.
Fed policy-makers hope that low rates will keep consumers spending and motivate businesses to boost investment.
The weakness in orders for manufactured goods was fairly widespread in November, although demand was especially slack for transportation products.
Orders for transportation equipment fell 1.6 percent in November from the previous month, representing a turnaround from October's 1.9 percent increase.
For automobiles and parts, orders dropped by 4.5 percent in November, after a 3.7 percent advance in the previous month.
Paul Taylor, chief economist at the National Automobile Dealers Association, said automobile sales have slowed from the summer's brisk levels, which were stoked by free-financing offers.
Still, the industry expects sales of 16.7 million cars and light trucks for 2002, which would mark the fourth-best year on record, Mr. Taylor said.

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