- The Washington Times - Wednesday, December 24, 2003


America’s factories saw orders for big-ticket goods drop by 3.1 percent in November, the largest decline in more than a year, raising new questions about how firm a grip manufacturers have on their fragile recovery.

The drop reported by the Commerce Department yesterday in orders for “durable goods” — costly manufactured items expected to last at least three years — came after a brisk 4 percent advance in October and a solid 2.2 percent increase in September.

The 3.1 percent decrease was the first decline since August and the largest since September 2002, when durable-goods orders fell by 6 percent.

The performance in November was considerably weaker than economists were expecting. They were forecasting a 0.6 percent rise. The weakness was broad-based — with cars, communications equipment, computers and machinery among the categories showing a drop in orders last month.

Although economists were disappointed, they said they thought the drop in durable-goods orders in November was a short-lived, one-month rough patch rather than a signal of troubled times ahead for the nation’s manufacturers.

“It does point out that while manufacturers have made significant gains, manufacturing is still very fragile and conditions could change quickly. But there is nothing that happened in November that would suggest that the declines would continue,” said Mark Zandi, chief economist at Economy.com. “All signals point to continued improvement in business investment.”

Mr. Zandi said he expects durable-goods orders to bounce back in December and that those numbers would be examined closely by economists.

In other economic news, new claims for unemployment benefits dipped last week by a seasonally adjusted 1,000 to 353,000, the Labor Department said in a report that suggested the pace of layoffs is stabilizing.

New-home sales declined by 2.4 percent in November to a seasonally adjusted annual rate of 1.08 million, the Commerce Department said in another report. That news came after a 2.5 percent decrease in October. Even with the recent declines, new-home sales are on track to set a record high for 2003, economists say.

On the manufacturing front, the factory sector was hardest hit by the 2001 recession and has struggled since then to get on a recovery path.

Manufacturers have lost 2.8 million jobs since July 2000, the month factory employment peaked in the last economic expansion.

Yesterday’s durable-goods report was inconsistent with a string of other economic reports that have suggested that the manufacturing sector truly might be on the mend.

Excluding orders for transportation equipment, which can swing widely from month to month, orders for all other big-ticket goods declined by 3.7 percent in November, the largest decrease since June 2002.

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