Factory Orders Slump In October

The Commerce Department said factory orders dropped 5.1% in October, the largest decrease since an 8.5% fall in July 2000. It was larger than the 4% drop that economists were expecting.

Economists believe manufacturing will continue to be under pressure for many more months, reflecting a deepening recession that already is the longest slump in a quarter-century.

The drop in orders marked the third consecutive decline with demand for both durable goods and nondurable goods falling. Demand for non-defense capital goods, considered a good proxy for business investment plans, fell by 5% in October, the biggest decline since January, and the fourth straight monthly decrease. With the economy weakening, businesses are cutting back on their plans to expand and modernize, adding another drag to overall growth.

Orders for durable goods, items expected to last at least three years, fell by 6.9%, even bigger than the 6.2% initial estimate the department made a few weeks ago. ❖