Factory orders fall for 4th month

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NEW YORK (CNNMoney.com) -- New factory orders fell for fourth straight month in November, the government said Tuesday, posting a much steeper decline than economists had expected.

Orders for manufactured goods fell 4.6% to $384.6 billion in November, according to the U.S. Census Bureau. Economists polled by Briefing.com had expected factory orders to decline by 2.6%.

The government also revised October's decline in factory orders to 6% from the 5.1% reported last month.

The report is "indicative of a recession that could match the severity of '73-'75 or '81-'82," said John Lonski, chief economist with Moody's Capital Markets.

Excluding transportation, new orders fell 4.2%, according to the report.

Orders for long-lasting durable goods for November were revised to a decline of 1.5% from the 1% reported by the Census Bureau last month. However the decline is still an improvement on the 8.5% decline reported for October.

Orders for replaceable non-durable goods, another component of the report, fell 7.4% to $198.9 billion, the bureau said.

Business spending is back: Despite the dismal outlook, there are a couple of surprising bright spots, according to Lonski.

The report showed a 3.9% jump in orders for non-defense capital goods, excluding aircraft, a 12.5% rise in orders for computer products, and a 5.7% increase in orders for information technology goods.

Orders for all three of those areas were negative in October, and a resurgence may indicate that businesses are purchasing equipment and spending on infrastructure, according to Lonski.

Non-defense capital goods are "a very reliable indicator" of business spending, said Lonski. Aircraft are not examined as an indicator because those orders usually take over a year to process.

However consumer spending, which fell 0.6% in November, according to the Commerce Department, will need to recover before we see an overall return in factory order strength, he added.

Other factors: Also included in the report, inventories declined for the third consecutive month, falling by 0.3% to $553.4 billion.

Shipments have also declined for the past four months in a row, dropping by 5.3% to $393.8 billion in November. According to the government, it was the largest decline in shipping since the Census Bureau began reporting data in 1992.

The number of orders that remained unfilled in November declined for the second month in a row, falling by 0.6% to $815.4 billion, following a 0.9% decline in October.