. WASHINGTON — Orders to U.S. factories for big-ticket manufactured goods fell for the fourth consecutive month in November, and...
WASHINGTON — Orders to U.S. factories for big-ticket manufactured goods fell for the fourth consecutive month in November, and a steady rise in inventories suggests production will need to be cut further.
The drop, while smaller than expected, revealed persistent weakness for the auto industry and a big drop in demand for commercial aircraft. Analysts believe manufacturing will not rebound until the broader economy does — at the earliest, in the middle of next year.
The Commerce Department reported that orders for durable goods fell 1 percent last month, a decline that was smaller than the 3 percent decrease economists had been expecting. However, the decrease was on top of an 8.4 percent plunge in orders in October, which had been the biggest decline in eight years.
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The weakness in November reflected a big 37.7 percent fall in demand for commercial aircraft and a smaller 0.2 percent drop in orders for new vehicles and auto parts.
Total transportation orders dropped by 7.4 percent in November. Excluding the big decline in transportation, total orders rose by 1.2 percent in November, the best showing since last June. However, this gain was expected to be only a temporary upward blip as the prolonged recession continues to cut into demand for factory products.
Strength was shown in demand for machinery, which rose by 4.1 percent, and computers and other electronic products, which posted a 5.9 percent increase. But orders for primary metals such as steel fell by 2.9 percent.
Total inventories of durable goods rose by 0.5 percent in November, the 16th increase in the past 17 months. That is likely to spell trouble in the months ahead as manufacturers slash production further in an effort to get inventories more in line with falling sales.
Major domestic industries are seeing severe weakness as the U.S. undergoes the longest recession in a quarter century. The weakness in the world’s largest economy has spread overseas, resulting in downturns in many of America’s biggest foreign markets, hurting U.S. exports.
Economists believe the U.S. recession, which began in December 2007, could last until summer or even longer, given the amount of turbulence in the financial sector, which has led banks to sharply curtail their lending. The lower lending means businesses can’t get the financing they need to purchase new equipment to expand and modernize.
Textron Inc., the manufacturer of Cessna jets, Bell helicopters and E-Z-GO golf carts, on Monday announced that it cut 2,200 jobs over the last few months, shedding 5 percent of its global work force, because of weak economic conditions.
U.S. auto companies have been in a prolonged slide with auto sales plunging by 37 percent in November to their weakest level in more than 26 years.
On Friday, the Bush administration said it would lend $17.4 billion to General Motors Corp. and Chrysler LLC from the government’s $700 billion rescue fund in an effort to buy them time to reorganize and avoid having to file for bankruptcy.
GM and Chrysler had said they would run out of cash within weeks if they didn’t get help. Ford Motor Co. had said it had enough cash to survive 2009.