- The Washington Times - Tuesday, January 7, 2003

WASHINGTON, Jan. 7 (UPI) — The Commerce Department reported Tuesday that orders for manufactured goods posted their third decline in four months during November, falling 0.8 percent to $319.3 billion after rising 1.4 percent in October.

Economists on Wall Street were expecting new orders placed with U.S. factories to decline by 0.5 percent during the month.

For the first 11 months of 2002, factory orders were down 1 percent, the government agency said.

Investors watch the report because it often dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more moderate growth that is less likely to cause inflationary pressures. By tracking economic data such as factory orders, investors will know what the economic backdrop is for these markets and their portfolios.

This report shows how busy factories will be in coming months as manufacturers work to fill orders.

It provides insight to the demand for not only hard goods such as refrigerators and cars, but non-durables such as cigarettes and apparel. In addition to new orders, analysts monitor unfilled orders, an indicator of the backlog in production. Shipments reveal current sales. Inventories give a handle on the strength of current and future production.

All in all, this report tells investors what to expect from the manufacturing sector, a major component of the economy and therefore a major influence on their investments.

The latest report from the Commerce Department showed excluding transportation equipment, orders fell 0.7 percent in November.

Orders for non-durable goods, which include industrial chemicals, drugs, papers and textiles, declined 0.1 percent during the month after rising 1 percent a month earlier.

New orders for durable goods, which account for more than half of the report, dropped 1.5 percent while orders for non-defense capital goods excluding aircraft dropped 2.6 percent in November after rising 5.4 percent in October.

Shipments, which economists consider a proxy for current business investment in computers and software, declined 1.1 percent after rising 1.4 percent in October.

The Commerce Department said computer orders declined 6.7 percent. Demand for motor vehicles declined 0.9 percent, orders for commercial aircraft dropped 7.8 percent in November, bookings for electrical equipment, appliances and components fell 0.7 percent while inventories of durable goods such as computers, aircraft and heavy machinery slipped 0.3 percent during the month.

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