- The Washington Times - Wednesday, February 5, 2003

The nation's manufacturers saw demand for their products grow in December, offering a dose of good news for an industry that has been struggling.
The Commerce Department reported yesterday that orders to U.S. factories bounced back in December, rising 0.4 percent over November orders, when orders declined 0.8 percent.
Stronger demand for computers and household appliances more than offset weaker demand for automobiles and other transportation equipment.
"We are seeing a little bit of a break in the ice for American manufacturers. … Their current order books are reflecting a brighter signal," said Carl Tannenbaum, chief economist at LaSalle Bank.
"This is especially encouraging because, after all, manufacturing has been the hardest hit in the last couple of years, and its recovery is thought to be central to an improving set of economic conditions in general," he said.
December's performance was slightly better than the 0.3 percent advance analysts were expecting.
On Monday, a more forward-looking report showed that manufacturing grew in January for the third straight month, though at a slower pace, as worries about a war with Iraq dampened optimism.
Manufacturing activity in January, as measured by the Institute of Supply Management's index, came in at 53.9, below December's 55.2 but above analysts' expectations of 53. The above-50 reading indicates the sector is still growing.
The two reports on manufacturing offered a sign that the beleaguered sector of the economy may be healing.
Manufacturers, who laid off 592,000 workers last year and have kept plants operating well below normal capacity, have been the weakest link in the economy's ability to recover fully from the lingering effects of the 2001 recession.
For all of 2002, orders to U.S. factories dropped 0.8 percent. Still, that was an improvement over the 7.4 percent decline for 2001.
And, shipments, a barometer of demand, fell 1.1 percent last year, compared with a 5.5 percent drop for 2001.
The Federal Reserve last week held a key interest rate steady at a 41-year low, hoping that will encourage consumers and businesses to spend and invest more, forces that would help the economy grow.
President Bush, meanwhile, has offered a plan to energize growth mostly through tax cuts.



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