- The Washington Times - Tuesday, November 5, 2002

ASSOCIATED PRESS

Orders to U.S. factories fell for a second straight month in September, another setback for manufacturing, which has seen almost 2 million jobs evaporate during the past two years.

The Commerce Department reported yesterday that factory orders declined by 2.3 percent in September, after a 0.4 percent drop in August. September's decline marked the third decrease in the past four months.

"With consumer demand softening of late, businesses remain very cautious about levels of new orders and production," said Susan Polatz, economist with Banc of America Securities.

While September's performance was better than the 3 percent decline analysts had predicted, more forward-looking data suggest a somber outlook for manufacturing.

The Institute for Supply Management reported Friday that manufacturing activity shrank in October, the second monthly drop in a row.

On the same day, the government reported that 49,000 factory jobs were lost in October, marking the 27th straight month in which manufacturing jobs were eliminated. Job losses during that period came to nearly 2 million.

"Clearly, manufacturing is suffering," said economist Clifford Waldman of Waldman Associates. "Manufacturing has lapsed from a moderate growth path into a modest recession."

Hardest hit by last year's recession, manufacturing has been the weakest link for the sputtering national economic recovery, which many analysts say is losing momentum in the October-December quarter.

The economy, powered by consumer spending, especially on cars and other big-ticket goods, rebounded in the summer, growing at a rate of 3.1 percent. But many analysts worry that the summer boom foreshadowed a winter lull.

Pessimistic economists believe the economy will grow at about a 1 percent pace in the October-December quarter as consumers tighten their belts, worried about the economy's direction and a war with Iraq. The wobbly economy will be weighing on voters' minds when they vote in midterm elections today.

Growing numbers of economists believe the Federal Reserve may cut short-term interest rates for the first time this year at its next meeting tomorrow. If not, analysts say a rate cut would be likely in December.

Rates have been at four-decade lows all year.

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