The Commerce Department said Thursday that demand for durable
goods dropped by 0.3 percent last month, a worse-than-expected
performance that underscored the problems manufacturers are facing
from a severe economic slowdown. The last time orders fell for
three consecutive months was from February to April of 2001, when
the country was sliding into the last recession.
President Bush on Tuesday said the economy was not in a
recession but a period of slower growth. However, economists who
believe the country has fallen into a recession will point to the
string of declines in manufacturing orders to support their view.
In other economic news, newly laid off workers filing claims for
unemployment benefits posted a sharp decline last week.
The Labor Department reported Thursday that claims for
unemployment benefits fell by 33,000 last week to 342,000.
Economists had been expecting that claims would rise by 3,000. The
four-week moving average for claims fell by 7,250 to 369,500.
Even with the improvements, analysts are still worried that the
weak economy is putting greater pressures on the labor market. The
unemployment rate climbed to 5.1 percent in March as businesses
laid off the largest number of workers in five years.
The weakness in manufacturing orders was led by a 4.6 percent
drop in orders for autos, a sector that has been hard hit by
soaring gasoline prices and the weakening economy, which have cut
sharply into car sales. Orders in the category that includes home
appliances fell by 6.6 percent. This industry has been hurt by the
two-year slump in home sales.
Economic growth slowed to a near-standstill at the end of last
year as the economy was battered by the prolonged slump in housing
and a severe credit crunch that has resulted in billions of dollars
of losses at many of the nation's largest financial institutions
and has made it harder for consumers and businesses to get loans.
Consumer sentiment has plunged to recessionary lows as Americans
have also watched gasoline prices soar to an average price above
$3.50 per gallon nationally.
The 0.3 percent drop in orders for durable goods, items expected
to last at least three years, followed even bigger declines of 0.9
percent in February and 4.4 percent in January.
Orders for all transportation products fell by 4.6 percent,
reflecting the big drop in demand for autos. Orders for commercial
aircraft actually rose by 5.5 percent while demand for defense
aircraft surged by 29.4 percent. Many defense industries have seen
big increases reflecting the wars in Iraq and Afghanistan.
A key category that is viewed as a proxy for business investment
plans showed no increase in March after a big 2 percent drop in
February. Businesses have cut back on their plans to expand and
modernize as the economy has softened.