updated 11/24/2004 10:53:15 AM ET 2004-11-24T15:53:15

America’s factories saw orders for big-ticket goods drop in October after brisk activity in the previous month, highlighting the sometimes bumpy recovery experienced by the nation’s manufacturers.

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The Commerce Department reported Wednesday that orders for durable goods — costly manufactured products expected to last at least three years — decreased by 0.4 percent in October from September.

Factory activity was weighed down last month by weakness in new bookings placed for automobiles, computers, electrical equipment and primary metals, which includes steel.

The performance was likely to disappoint economists, who were forecasting a 0.5 percent increase in durable-goods orders for October.

Still, there were some aspects of Wednesday’s report that might temper their disappointment. Orders for durable goods in September jumped by 0.9 percent from the previous month, according to revised figures. That turned out to be considerably stronger than the government previously estimated.

And, shipments of durable goods for October — a good barometer of current demand — rose by a solid 0.6 percent. That compared with a 1.1 percent drop in September.

Other economic news, also released Wednesday, was upbeat:

  • Sales of new homes increased by 0.2 percent in October from the previous month to a seasonally adjusted annual rate of 1.23 million homes, the third-highest level on record, the department said in a second report. The latest snapshot of housing activity was better than economists were anticipating. They were predicting sales would go down in October.
  • New claims for unemployment benefits last week fell by a seasonally adjusted 12,000 to 323,000, a three-month low, the Labor Department reported. That showing also was better than economists were expecting. They were forecasting a small rise in new applications. The report suggested that the labor market recovery is gaining traction.

Encouraged by recent economic activity, Federal Reserve Chairman Alan Greenspan and his colleagues agreed earlier this month to boost short-term interest rates by one-quarter percentage point to 2 percent. A growing number of economists believe the Fed may raise rates for a fifth time this year on Dec. 14, its last meeting for 2004.

Looking ahead to his second term at the White House, President Bush says his economic agenda will focus on simplifying the nation’s tax code and reforming Social Security. He also wants Congress to make his tax cuts permanent. Democrats, including former rival for the presidency, Sen. John Kerry of Massachusetts, contend that the president’s tax cuts have mainly helped the wealthy and pushed the government’s balance sheets deeper into red ink.

In the durable-goods report, new orders placed for automobile and parts fell by 2.8 percent in October, following a 1.8 percent decline in September.

New orders for computers plunged by 10.3 percent in October, compared with a 17.5 percent jump in September. Orders for electrical equipment, appliances and components fell 3.5 percent in October, following a 2.7 percent decline. Orders for primary metals declined by 2 percent last month, after a 3.7 percent decrease in September.

There were some bright spots: New orders for machinery, fabricated metal products, communications equipment and airplanes and parts for military use all posted gains in October.

A weaker value of the U.S. dollar, meanwhile, should help U.S. manufacturers because it makes their goods less expensive for foreigners to buy, thus bolstering the competitiveness of U.S. exports in international markets. The U.S. dollar slid to a new low Wednesday against the euro — breaking a day-old record.

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