Economy hits soft spot
By Martin Crutsinger
Associated Press
WASHINGTON — Orders to U.S. factories, after posting two months of solid increases, fell by 1.4 percent in November, the biggest decline in seven months. But analysts viewed the drop as a temporary blip in what has been an improving picture for American manufacturers.
The Commerce Department said yesterday that while a number of sectors suffered declines in orders, the weakness was concentrated in communications, which saw orders plunge by 41.1 percent.
Demand in all categories of durable goods was down 2.5 percent, a slightly smaller drop than the 3.1 percent originally stated in a preliminary report two weeks ago. It was the biggest decrease in durable goods in more than a year.
Analysts noted that orders, especially for big-ticket items, are extremely volatile from month to month and said the November drop did nothing to shake their view that U.S. manufacturing, after suffering through the loss of 2.8 million jobs over the past three years, is on the verge of a rebound.
President Bush has come under increasing attacks from Democratic candidates running for president, who contend the administration has not done enough to alleviate the problems in U.S. manufacturing. The sector has seen an unbroken string of monthly job losses now totaling 2.8 million since manufacturing employment peaked in July 2000.
A second report yesterday showed that sentiment in the services sector of the economy, where most Americans work, remained in positive territory although the Institute of Supply Managers' non-manufacturing index took a slight dip to 58.6 last month. It was the ninth straight month the index was signaling growth in services, represented by a reading above 50.
This indication of expansion in services followed a report last week that the supply manager's closely watched manufacturing gauge climbed to a two-decade high in December.
"The combination of the manufacturing and nonmanufacturing indices indicates that economic growth is broad based and strong," said Joel Naroff, head of a Holland, Pa., forecasting firm.
In other economic news, the number of people late on their credit-card payments hit an all-time high of 4.09 percent in the July-September quarter of last year, the American Bankers Association reported yesterday.
The figure was up from a 4.04 percent level in the second quarter. ABA chief economist James Chessen blamed part of the problem on the fact that Americans' financial difficulties have been intensified with the longer time it is taking many laid-off workers to find new jobs.
The ABA data followed an earlier report by the Federal Reserve that showed that total consumer debt in America hit a record of $1.98 trillion in October.
The 1.4 percent decline in factory orders for November followed strong gains of 2.4 percent in October and 1.4 percent in September. It was the biggest decline since a 2.6 percent falloff last April.
The 2.5 percent drop in orders for durable goods left total demand for durable goods at a seasonally adjusted $181.2 billion in November. Durable goods orders had been up 3.9 percent in October.
Orders for nondurable goods, items not expected to last at least three years, were down in November, falling 0.2 percent after posting a 0.6 percent increase in October.
Analysts discounted the big 41.1 percent drop in demand for nondefense communications equipment, viewing it as a temporary setback.
