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Factory orders tumble
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August 2, 2001: 11:18 a.m. ET
June orders off 2.2%, below forecast, indicates further economic weakness
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NEW YORK (CNNfn) - Orders to U.S. factories tumbled in June, the government reported Thursday, the latest sign of weakness in the beleaguered manufacturing sector of the world's largest economy.
Factory orders fell 2.4 percent in June, the Commerce Department reported, following a revised 2.2 percent increase the month before. Analysts polled by Briefing.com expected orders to fall by 1.1 percent.
Separately, new jobless claims fell for the third straight week last week, the Labor Department reported, hinting at a slight pickup in the U.S. job market a day ahead of the monthly employment report.
On Wall Street, stocks started higher Thursday with the Dow Jones Industrial average climbing 19.51 points to 10,529.52 shortly after 11 a.m. ET. The Nasdaq rose 6.55 points to 2,074.93.
"This is the third decline in the last four months. Again, it's worrisome, but not surprising," Wayne Ayers, chief economist with FleetBoston Financial, said.
Ayers said the report offered no reason to panic, and noted that markets could be heading higher on investor optimism that the factory orders, in combination with higher jobless claims, that the economy is finally bottoming out and that a recovery is around the corner.
"I think if you take those two things together, there is some hope," Ayers said.
The report comes a day after the National Association of Purchasing Management said its key index of manufacturing activity fell to 43.6 in July from 44.7 in June, below analyst forecasts and representing the 12th straight month of decline.
Manufacturing has been the hardest hit sector during this latest economic slowdown as hundreds of thousand of layoffs coupled with fluctuating energy prices and a volatile stock market have dampened demand among consumers, whose spending fuels two thirds of the economy.
Factories have been cutting back on inventory in an effort to adjust to the slower demand, causing them in turn to lay off more workers.
The Federal Reserve has slashed interest rates six times so far this year, and analysts say a seventh is likely when the Fed next meets on Aug. 21, as the central bank scrambles to free up investment capital to help save the economy from a recession.
Consumers have been the lone standouts that have prevented the slowdown from becoming a full-blown recession. Though their spending is off compared with the torrid pace of a year ago, consumers have simply streamlined purchases, buying mostly necessary items like clothing, food and toiletries from bargain-priced discount chains and putting off big ticket purchases.
In Thursday's report, transportation equipment, which registered a 3.5 percent increase in May due to strong demand for automobiles and parts, logged the biggest decline in June, falling 3.3 percent to $52.6 billion.
Orders for computers and electronics products fell 1.3 percent to $34.7 billion in the period, reflecting lower demand for communications equipment, the government said.
Durable goods orders declined 1.7 percent in June to $184.8 billion, revised from a 2 percent decline. Shipments of machinery, transportations equipment, computers and electronics, and fabricated metal all fell. Overall shipments posted their largest decrease in nine years, the government said.
New orders for non-durable goods, which exclude volatile auto and appliance orders, slipped 3.3 percent to $149.7 billion. 
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