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Friday, 25 October, 2002, 14:10 GMT 15:10 UK
Spectre of recession haunts US economy
Car production line
Orders are weak across manufacturing
The US economy is still struggling to banish the spectre of recession, figures have revealed.

Stock market losses pushed consumer sentiment to its lowest level for nine years in October.

And orders to factories for durable goods fell by 5.9% in September, the biggest fall for 10 months.

The University of Michigan's October consumer sentiment index fell to 80.6 from 86.1 in September.

And there was a steep fall in the expectations index, which tracks attitudes about the year ahead, to 73.1 from 79.9.

Stock market rally

Consumer spending drives about two-thirds of the US economy, and if spending slows any economic recovery is at risk.

The recent rises in US stock prices have had little impact on consumer sentiment, but analysts said that if shares held on to their gains, it could lead to a partial recovery in November.

"It is just a bit too soon to expect the survey to reflect the full effect of the recent rally, so the preliminary November reading should be much better, provided stocks don't fall apart again," said Ian Shepherdson, economist at High Frequency Economics

Interest rate cut

Demand for durable goods - manufactured products expected to last three or more years - fell for the third time in the past four months.

The US Commerce Department said there was widespread weakness throughout American manufacturing with orders down for goods ranging from cars to communications equipment.

Manufacturers in the US have suffered most in the recession.

Earlier this week the Federal Reserve's survey of business conditions said that manufacturing activity had weakened over the past two months.

Many economists expect the Fed to cut interest rates at its November meeting.


Economic indicators

Fears and hopes

US Fed decisons

IN DEPTH
See also:

23 Oct 02 | Business
20 Aug 02 | Business
19 Aug 02 | Business
13 Aug 02 | Business
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