Orders To U.S. Factories For Big-Ticket Goods Edges Up Only 0.1 %

Thursday, December 27th 2007, 7:47 am
By: News On 6

WASHINGTON (AP) _ U.S. factories saw orders for costly manufactured rise only marginally in November _ falling short of expectations for a much bigger gain and underscoring the strains to the economy from housing and credit problems.

The Commerce Department reported Thursday that orders for ``durable'' goods _ products expected to last at least three years _ increased by just 0.1 percent last month. The tiny rise came after durable-goods orders fell by 0.4 percent in October. Economists were hoping for a larger rebound _ of a 2.2 percent increase _ in new orders placed at the nation's factories in November. Still, the November rise did mark the first increase in durable-goods orders in the last four months.

Excluding volatile orders for transportation equipment, which can swing widely from month to month, demand for all other costly manufactured goods fell by 0.7 percent in November, marking the second straight monthly decline.

Orders for machinery, computers and electronic products, communications equipment, defense aircraft and fabricated metal products all posted declines in November. However, those losses were more than offset by gains in demand for electrical equipment and appliances, automobiles, commercial airplanes and primary metals, including steel. That led to the small rise in overall durable-goods orders in November.

Orders for capital goods, excluding aircraft _ a category considered a good proxy for business investment _ fell by 0.4 percent in November, the second straight monthly decline.

The economy, which logged its best growth in four years during the summer, probably slowed sharply to a pace of just 1.5 percent or less in the October-to-December quarter, according to analysts' projections. The sour housing market is expected to weigh on overall economic activity well into next year. Housing and credit problems have raised the odds that the economy could slip into a recession.

To prevent this from happening, the Federal Reserve has cut a key interest rate three times this year. The last cut, on Dec. 11, dropped the key rate to 4.25 percent, a two-year low.

One of the economy's brighter spots has been a pickup in sales of U.S. goods and services to foreign buyers. A drop in the value of the U.S. dollar, relative to other currencies, has bolstered U.S. exports. Those brisk sales were a key factor behind the economy's stellar growth in the summer. Sales of U.S. exports are expected continue to do well in the current quarter, helping to blunt some weakness from other parts of the economy.