WASHINGTON — Orders to U.S. factories for big-ticket manufactured goods fell for the fifth straight month in December, closing out a dismal year in which demand dropped by the largest amount since the recession year of 2001.
Given the severity of the current recession, manufacturers face bleak prospects this year as well.
The Commerce Department said Thursday that new orders for durable goods dropped by 2.6 percent last month, an even bigger decline than the 2 percent decline that economists expected.
Orders fell 5.7 percent for the year, the second biggest drop on government records, exceeded only by a 10.7 percent plunge in 2001.
There were big drops in demand last month for commercial aircraft, primary metals, machinery and computers. Orders for defense aircraft and electrical appliances were among the few places showing increased demand.
Manufacturers are struggling as the country slogs through the most severe recession in at least a quarter-century. With demand for their products plunging, companies have been announcing thousands of new layoffs on top of the 2.6 million jobs that were cut last year, the biggest decline in six decades.
In a separate report, the Labor Department said the number of newly laid off workers filing claims for unemployment benefits jumped to 588,000 last week while the number of Americans receiving unemployment benefits rose to an all-time high of nearly 4.8 million.
In the durable goods report, orders for all transportation products posted a 0.6 percent increase. But that strength came from a 16.4 percent jump in demand for military aircraft. Orders for commercial aircraft were down a huge 43.6 percent, while demand for motor vehicles and parts fell by 5.2 percent.
American automakers are struggling through tough times with two companies, General Motors Corp. and Chrysler LLC, being forced to obtain government bailouts in an effort to avoid having to file for bankruptcy protection.
Meanwhile, Ford Motor Co. announced Thursday that it lost $5.9 billion in the fourth quarter of last year and that its credit arm would cut 20 percent of its work force, or 1,200 jobs, but said it has no plans to seek federal aid unless economic conditions worsen.
In another sign of the hard times facing manufacturers, aircraft giant Boeing Co. said Wednesday that it plans to cut 10,000 jobs after reporting a surprising fourth-quarter loss. Boeing’s job cuts include plans announced earlier this month to eliminate 4,500 positions from its Seattle-based commercial jet business and 5,500 positions from other parts of the company.
Economists believe there is little relief in sight with a report Friday expected to show that the overall economy was contracting at an annual rate of 5.4 percent in the final three months of this year, which would be the worst performance in a quarter-century. The current recession, which began in December 2007, is already the longest downturn since the severe slump of 1981-82 and many economists believe it will become the longest in the post World War II period. They don’t expect a rebound to occur until the second half of this year.
President Barack Obama won a victory in his efforts to boost the economy when the House on Wednesday approved the $819 billion economic stimulus plan he is supporting to jump-start the economy.
Excluding the volatile transportation sector, orders would have fallen by 3.6 percent in December, worse than the 2.7 percent drop that economists expected.
Shipments of durable goods dropped 0.7 percent in December and fell 2.7 percent for all of 2008, the worst showing since shipments plummeted 8.4 percent in 2001.
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