Factory orders fall more than expected

Government says demand for manufactured goods falls 2.5% in September.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Lara Moscrip, CNNMoney.com contributing writer

Should the government provide financial assistance to help GM and Chrysler merge?
  • Yes
  • No

NEW YORK (CNNMoney.com) -- New factory orders fell more than expected in September, marking the second decline in a row, the government announced Tuesday.

The U.S. Census Bureau said orders fell 2.5% to $432 billion in September, a steeper drop than the 0.8% forecasted by a Briefing.com survey of economists.

The month of August was revised to reflect a greater decline, to 4.3%.

The main source of weakness in the report comes from disruptions to refineries due to Hurricane Ike in September and the falling price of petroleum, according to Mark Vitner, senior economist at Wachovia.

"This report is not as bad as meets the eye," Vitner said. "Because refineries were shut down, they couldn't take orders. Also, the price of petroleum plummeted in September, reducing the dollar values of orders," Vitner said.

According to the report, the value of manufacturers' shipments for petroleum refineries fell 17.5% in September, following an 8.7% drop in August, and a 0.5% drop in July.

Excluding transportation, orders fell 3.7%, the largest percent decrease since data was reported in 1992.

Shipments fell for the second month in a row, dropping 2.8%, or $12.5 billion, to $432.9 billion. That followed a 3.7% decrease in August. For the year, shipments are up 5.9%.

Unfilled orders are at the highest levels since the the data was reported in 1992. They increased 0.4%, or $3.0 billion, to $829.5 billion, and following a 0.3% August increase.

That is some cause for optimism, Vitner said. "It's a very good thing to have a backlog of work, so that even if orders fall off, there's a back log to keep them operating," he said.

Inventories are down 0.7%, to $558.7 billion, down following four consecutive monthly increases. In August, inventories reported a 0.7% August increase.

Durable goods, which make up more than half of the factory orders report, was revised up to 0.9% from the report issued last week. That brings new orders for manufactured durable goods up $1.8 billion to $207.9 billion, following a 5.5% decrease in August.

The other main component of the report, new orders for manufactured nondurable goods, such as food and tobacco, decreased $13 billion, or 5.5% to $224.1 billion.

In a separate report released Monday, a key index of the nation's manufacturing activity fell to a 26-year low, sliding into recession territory, according to the Institute for Supply Management.

Last week, the broadest measure of the nation's economy suffered its biggest decline in seven years. The GDP fell at an annual rate of 0.3%. That compared with a 2.8% growth rate in the second quarter, when growth was boosted by economic stimulus checks and strong exports. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Sponsors

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.