Factory Orders Flat in August

Orders to U.S. factories for manufactured goods were weak for a second consecutive month as the nation's manufacturing sector sent signals it was shifting into a lower gear.

The Commerce Department reported Wednesday that new orders were basically unchanged in August at $403.6 billion following a 1 percent decline in July. The weakness in August reflected big declines in demand for computers and commercial aircraft.

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Analysts believe that the slowing economy is beginning to have an impact on manufacturers, with the weakness apparently continuing in September. The Institute for Supply Management reported Monday that its closely watched gauge of manufacturing activity expanded in September at the slowest pace in more than a year.

The overall economy slowed abruptly in the spring under the impact of soaring gasoline prices, rising interest rates and a weakening housing market.

That slowdown is expected to continue for the rest of the year, although recent declines in energy prices have eased worries that a full-blown recession could be brewing.

The Federal Reserve, which had boosted interest rates for two years to fight rising inflation pressures, is expected to keep rates unchanged for the rest of this year, content to watch and see if the slowing economy will reduce inflation.

The unchanged level for orders in August was in line with expectations but the government revised the July performance from an originally estimated 0.6 percent decline to an even worse 1 percent fall.

Orders for durable goods, items expected to last three years or more, were unchanged in August following a 2.8 percent plunge in July. The August performance had originally been reported last week as a drop of 0.5 percent.

Orders for non-durable goods were unchanged in August at $193.1 billion following a 1.2 percent July increase.

Excluding the volatile transportation sector, factory orders fell by 1.5 percent in August after having dropped by 0.1 percent in July.

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