The Joplin Globe, Joplin, MO

First 100 Days

Discussion

February 26, 2009

Day 37: Orders for big-ticket goods weaker than expected

WASHINGTON (AP) — Manufacturers saw orders for big-ticket goods plunge a bigger-than-expected 5.2 percent in January as global economic troubles cut into demand from customers in the United States and abroad.

The latest report on U.S. factory activity, released Thursday by the Commerce Department, showed orders falling for a record sixth straight month. The previous record of four straight monthly declines came in 1992.

The weakness in January was widespread with orders for autos, metal products, machinery, computers and electrical equipment, and household appliances all posting declines.

Not only was last month’s drop steeper than the 2.5 percent decline analysts expected, but activity in December turned out to be much weaker. Updated figures showed a 4.6 percent drop in orders, versus a 3 percent decline previously estimated.

Manufacturers have trimmed production and payrolls as they race to cut costs to survive the recession. The collapse of the U.S. housing market has especially crimped demand for all kinds of building materials and equipment, as well as a range of consumer goods, including furniture, carpet and household appliances.

Consumers at home and abroad are cutting back, which is hurting U.S. manufacturers.

The department’s report showed that orders for autos dropped 6.4 percent in January, from the previous month. Orders for primary metals — a category that includes steel — fell 4.6 percent. Demand for fabricated metal products declined 1.1 percent.

Machinery orders dipped 2 percent. Orders for computers and related products plunged 16 percent. Orders for electrical equipment, household appliances and other components fell 6.1 percent.

Stripping out volatile transportation orders, all other orders sank 2.5 percent in January, also the sixth straight monthly decline. Economists expected a 2.1 percent drop for this category.

The rough economic environment has especially hurt U.S. automakers. Pushed to the financial edge, Detroit’s General Motors Corp. and Chrysler LLC are restructuring operations in hopes of securing billions more in federal aid.

The current January-to-March quarter is shaping up to be another very feeble period for the economy. When the government releases its updated figure for the economy’s performance at the end of last year on Friday, it is expected to be much worse. Analysts now are predicting the economy contracted at a pace of 5.4 percent in the final three months of 2008. That would be weaker than the 3.8 percent annualized drop estimated a month ago.

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