Orders for Big-Ticket Goods Fall More than Expected
Orders for big-ticket manufactured goods unexpectedly fell again in September, raising new worries about how much harm a severe housing slump and credit crunch are causing the overall economy.
The Commerce Department reported Thursday that orders for durable goods dropped 1.7 percent last month following an even bigger 5.3 percent plunge in August. It marked the first back-to-back declines in more than a year and took economists by surprise. They had forecast new orders would rebound by 1.5 percent in September.
The September drop reflected weakness in such areas as autos, fabricated metals, computers and electronics products, and electrical appliances.
The decline in manufacturing orders followed several other reports showing economic weakness, including continued steep slides in sales of existing homes and reports from banks and investment houses that they were having to take big write-offs due to losses in such areas as mortgage-backed securities.
Reports about those losses in August had caused the worst credit crunch in nearly a decade as the market for many kinds of investments nearly dried up as bond holders became worried about the safety of their investments.
The concern is that if the economic disruptions become serious enough, they could drag down overall economic growth, which has already slowed under the impact of the steep downturn in housing.
Many economists, however, believe that the economy will still be able to avoid an outright recession because the Federal Reserve, which cut a key interest rate for the first time in four years, will keep cutting rates to stimulate economic growth. The Fed meets again next week.
In other economic news, the Labor Department said that the number of Americans filing new claims for unemployment benefits fell by 8,000 last week to 331,000.
Wall Street had been expecting a much larger drop of 17,000 claims. The weekly filings of jobless claims are being followed closely for any signs that the labor market is weakening significantly, which would be another headwind the economy would have to confront.
The report on durable goods showed that orders for transportation equipment fell by 6.3 percent last month after an even bigger 12.3 percent fall in August.
Demand for commercial aircraft did rebound, rising by 18.2 percent in September after a 40.2 percent plunge in August as demand picked up at aircraft-maker Boeing.
But orders for autos fell by 2.9 percent after an even bigger 8.2 percent drop in August, reflecting the continuing troubles for domestic automakers struggling with foreign competition and consumers' shift away from gas-guzzling vehicles.
Orders for military aircraft were also down a sharp 37.3 percent in September after having surged in August.
Excluding transportation, orders for durable goods would have risen by 0.3 percent following a 1.8 percent drop in orders outside of transportation in August.