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Factory Orders Drop 2.5 Percent In Month

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The Associated Press

The Tampa Tribune

Published: November 5, 2008

WASHINGTON - Factory orders dropped by more than three times as much as analysts expected in September as the U.S. manufacturing sector continues to suffer from the economic downturn.

The Commerce Department said Tuesday that factory orders fell by 2.5 percent from August, far more than the 0.8 percent drop expected by Wall Street economists surveyed by Thomson Reuters. That's on top of a revised 4.3 percent decline in August, which was the steepest in almost two years.

Excluding autos and aircraft, orders fell 3.7 percent, the steepest drop since 1992 when the department began tracking sector-specific changes.

Orders for nondefense capital goods excluding aircraft, considered a good indication of business investment plans, fell by 1.5 percent. That follows a 2.3 percent drop in August and indicates companies are cutting back on investments, likely because of the economic downturn and difficulty getting credit.
Durable goods orders - big-ticket items such as construction machinery expected to last at least three years - rose by 0.9 percent, up from a preliminary estimate of 0.8 percent last week.

But that increase was overwhelmed by a 5.5 percent drop in orders of nondurable goods, which include food, clothes and petroleum products.

Orders for primary metals, including steel and aluminum, dropped by 4.6 percent, while orders for computers and electronic equipment declined by 1.8 percent.

The Commerce Department said last week that the economy contracted at an annual rate of 0.3 percent in the third quarter. Businesses reduced their spending on equipment at a 5.5 percent pace, according to last week's report.

The department said Tuesday that orders for autos and auto parts increased by 2.7 percent, after plummeting 10.6 percent in August.

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