Factory Orders Slide Sharply in September

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New orders for goods made at U.S. factories dropped sharply in September, the government said Friday in a report that provided more evidence the U.S. manufacturing sector's year-long recession is far from over.

Led by large declines in orders for transportation, computer and electrical equipment, the value of U.S. factory orders in September fell 5.8 percent — the biggest drop since January — to a seasonally adjusted $313.15 billion, the Commerce Department said. Orders fell 0.1 percent in August.

The orders decline in September was worse than forecast by Wall Street analysts who on average figured factory orders fell 4.7 percent in September.

Orders for transportation equipment, including car parts, aircraft and boats, slid 15.8 percent in September following a 2.1 percent decline in August. Orders for computers and electronic products fell 8.4 percent in September after rising 0.2 percent in the prior month while orders for electrical equipment, appliances and components sank 9.6 percent following a 2.2 percent drop in August.

Shipments of factory goods fell 4.2 percent in September after a 0.3 percent decrease in the previous month. Inventories, meanwhile, fell for the eighth straight month, declining 0.9 percent in September after posting a 0.7 percent decrease in August.

The inventory-to-shipments ratio rose to 1.43 in September from 1.38 in the prior month.

Economists widely believe the U.S. manufacturing sector, which accounts for 15 percent of the nation's economic activity, has been in a deep recession for more than a year. Even before Sept. 11, factories had been hit hard by a slowdown in the U.S. economy as demand has dropped off and firms have operated out of existing inventories.

The Commerce Department report was in line with other data that have suggested it may be some time before the manufacturing sector stages a comeback.

On Thursday, the National Association of Purchasing Management said its monthly gauge of factory activity plunged to 39.8 in October — its lowest level since Feb. 1991 when the economy was last in a recession — from 47.0 in September.

A number under 50 signals contracting manufacturing activity. The NAPM index has been below 50 since August 2000.