updated 7/2/2004 10:42:54 AM ET 2004-07-02T14:42:54

America’s factories saw orders dip in May for the second straight month, held back by slackening demand for cars and other big-ticket goods.

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The 0.3 percent drop in orders placed with U.S. factories came after a larger 1.1 percent decline in April, the Commerce Department reported Friday. It typified the sometimes bumpy recovery experienced by the nation’s manufacturers.

Economists, however, weren’t likely to see the back-to-back declines as a sign of trouble ahead for manufacturers, but rather a temporary lull. Other recent reports, including two from the Federal Reserve, suggested that factory activity was in good shape in May

And, a report looking at manufacturing activity for June, released Thursday by the Institute for Supply Management, suggested that the sector grew solidly last month— although at a slower pace than seen in May.

In Friday’s report, the weakness was concentrated in orders for “durable” goods — costly manufactured goods, such as cars, expected to last at least three years.

Orders for such durable goods dropped by 1.8 percent in May, following a 2.7 percent decline in April. Orders for cars, machinery, computers, and electrical lighting equipment were among the categories seeing orders go down in May.

On the bright side, however, orders for “nondurable” goods, such as food and clothes, rose by a strong 1.5 percent in May, following a solid 0.8 percent gain in April. Dairy products, beverages, apparel and chemicals were among the categories seeing gains in May.

In a separate report, the Labor Department said that factories lost 11,000 jobs in June, disappointing news after logging an increase of 75,000 jobs in the previous four months.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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