WASHINGTON – New orders at U.S. factories fell 4.7 percent in October, the biggest fall in more than six years and marking the third drop in four months, while inventories rose again suggesting growing slack in the economy, a government report said on Tuesday.
Market analysts surveyed by Reuters had forecast an average fall of 4 percent. October's decline was the biggest drop since an 8.6 percent fall in July 2000.
Excluding transportation, factory orders fell just 0.8 percent.
Orders in September bucked the downtrend, rising a revised 1.7 percent from the preliminary 2.1 percent gain, the Commerce Department said.
Manufacturing shipments inched up 0.1 percent, the second gain in three months, while unfilled orders rose 1.2 percent for the 17th increase in the last 18 months.
Inventories rose 0.4 percent, up for 12 of the last 13 months. The inventory-to-shipment ratio, a measure of how many months it would take to exhaust stores of goods, remained unchanged from September at 1.23, the government said.
The indications of an easing economy come on the heels of a report earlier on Tuesday showing weaker-than-expected third-quarter productivity growth of 0.2 percent that was construed by market analysts as taking pressure off the Federal Reserve to raise rates next week.
The Federal Reserve Board has warned it must remain vigilant on inflation although it halted a two-year rate-hiking campaign in August with its benchmark fed funds rate at 5.25 percent. The U.S. central bank's next rate-setting meeting is set for Dec. 12.