updated 1/4/2007 10:34:05 AM ET 2007-01-04T15:34:05

Orders to U.S. factories posted a smaller-than-expected increase in November as demand for autos, machinery and steel all posted declines, reflecting the slowdown that has hit the manufacturing sector.

Major Market Indices

The Commerce Department reported that orders for manufactured goods rose by 0.9 percent, only a slight rebound after a sharp 4.5 percent drop in October. Analysts had been expecting a stronger 1.4 percent increase.

The November performance provided evidence that the slowing economy is beginning to have an impact on manufacturers, with auto plants and sectors supplying the slumping housing industry among some of the hardest hit.

The 0.9 percent increase pushed total orders to $394.3 billion and reflected a 1.6 percent rise in demand for durable goods, items expected to last at least three years, and an unchanged reading for non-durable goods. With the economy slowing sharply this year, orders have been down three of the past five months.

The strength in orders in November was led by a 43.6 percent surge in demand for military aircraft. Orders for commercial airplanes rose a smaller 0.8 percent while orders for motor vehicles fell by 2.4 percent, reflecting a continued sales slump as consumers turn away from the once-hot gas guzzling sport utility vehicles.

Industries tied to the slumping housing market also showed weakness with furniture orders falling by 3.3 percent while demand for household appliances dropped by 7.8 percent.

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