WASHINGTON – Orders for big-ticket goods were flat in December after taking a dive in November, highlighting the struggles America's manufacturers are encountering as they try to get on firm footing.
The latest snapshot of manufacturing activity reported by the Commerce Department (search) on Wednesday disappointed economists, who were forecasting a solid 2 percent rebound in orders for costly manufactured goods in December.
The flat reading in orders for "durable goods (search)" — manufactured items expected to last at least three years — followed a 2.3 percent drop in November. That weak performance raised questions about how firm a grip manufacturers had on their own recovery.
At the time, economists were hopeful the drop was just a one-month rough patch, rather than a signal of new trouble ahead for manufacturing.
In December, falling orders for communications equipment, metal products and electrical equipment were offset by rising orders for automobiles, computers and machinery.
For all of 2003, however, orders for durable goods rose by 2.8 percent from 2002. That marked the largest increase since 2000, when orders went up by 3.3 percent. The performance over the course of 2003 showed that manufacturers did make strides in the right direction.
Still, manufacturing, hardest hit by the 2001 recession, has struggled to get back to full health. Factories have lost 2.8 million jobs since July 2000, the month manufacturing employment peaked in the last economic expansion.
Other economic reports on manufacturing suggest activity is improving, however, as many plants continue to operate below capacity. Economists are hopeful that businesses will ramp up capital spending this year and invest more in rebuilding inventories, factors that would help manufacturers and spur growth.
In December, orders for communications equipment plunged 18.1 percent, following a huge 46.4 percent decline in November. Orders for primary metals, including steel, declined by 2.8 percent in December, after a 1.8 percent decline. Fabricated metal products saw orders dip by 0.8 percent last month, after a 0.3 percent decline.
On a brighter note, orders for automobiles rose 2 percent in December, compared with a 1.3 percent drop in November. Orders for computers also were up 2 percent last month, following a tiny 0.1 percent rise. Orders for machinery increased 1.7 percent in December on top of a 2.8 percent rise in November.
Excluding orders for transportation equipment, which can swing widely from month to month, durable goods orders fell by 0.7 percent in December, marking the second consecutive monthly decline for this category.