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Factory orders suffer setback in November

Orders to U.S. factories, after posting two months of solid increases, fell by 1.4 percent in November, the biggest setback in seven months.
/ Source: The Associated Press

Orders to U.S. factories, after posting two months of solid increases, fell by 1.4 percent in November, the biggest setback in seven months.

The Commerce Department said Tuesday the weakness was concentrated in the communications sector, where orders plunged by 41.1 percent in November.

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.

Analysts discounted the November decline as a temporary blip in an otherwise brightening picture for U.S. manufacturing, pointing to a separate survey by the Institute of Supply Management, whose key index of sentiment in the manufacturing sector has soared over the past two months. That signaled a turnaround in a sector that has suffered the loss of 2.8 million jobs over the past three years.

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 on Tuesday.

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 by the fact that it is taking many laid-off workers a longer period of time to find new jobs.

The ABA data followed an earlier report by the Federal Reserve which 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 as well 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 non-defense communications equipment, viewing it as a temporary setback in a sector that has been surging over the past six months.

President Bush has come under increasing attacks from Democratic candidates running for president. They contend the administration has not done enough to alleviate the problems in U.S. manufacturing, which has seen an unbroken string of monthly job losses now totaling 2.8 million since manufacturing employment peaked in July 2000.