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Tuesday, 3 April, 2001, 14:48 GMT 15:48 UK
Factory orders fall in US
US factory orders fell for the second month in a row in February
US factory orders fell in February for the second month in a row, led by a drop in demand for industrial machinery and transport products such as cars and aeroplanes.

The 0.4% dip reported by the US government's Commerce Department on Tuesday left orders at a seasonally adjusted level of $363bn, the lowest since October 1999.

The figures will be seen as further evidence of a slowdown in the US economy as companies throttle back production and cut jobs in an effort to cope with flagging demand.

In January, factory orders were down by 4.3%, according to revised figures, weaker than the government previously estimated.

Kick start

The US central bank, the Federal Reserve, has cut interest rates three times in 2001 in an effort to stave off a recession.

The cuts, which total 1.5 points, lower borrowing costs and are aimed at boosting consumer and business spending.

But they have so far failed to kick start economic growth.

On Monday, a report by the National Association of Purchasing Management showed that manufacturing activity fell in March for the eighth month in a row.

But the decline was at a slower rate than in January and February, which some economists found encouraging.

Industrial equipment, including machine tools and computers, posted the biggest drop in orders of 3.1%, following an increase of 3.7% in January.

Orders for fabricated metal products declined by 3.7% in February, the largest decrease since May 1997.

In January, such orders fell by 1.2%.

Transportation equipment saw orders go down by 1.3% after a huge 24.2% plunge the previous month.

These orders, which include cars, aeroplanes, ships and military tanks, can swing widely from month to month.

Excluding transportation equipment, overall orders to factories fell by 0.3% in February, the third straight monthly decline.

Bright spot

Primary metals, including steel, saw orders decrease by 0.5% for the second month in a row.

Shipments, a good barometer of current demand, fell by 0.5% in February, marking the sixth consecutive decrease.

Industrial machinery had the largest decrease with shipments falling 4.7%, the biggest drop since July 1986.

The weakness was led by slackened demand for computers and office equipment.

However, one bright spot in the report was orders for electronics and electrical equipment, including household appliances and communications equipment, which rose 5% in February, after a 8.6% drop the month before.


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See also:

30 Mar 01 | Business
07 Mar 01 | Business
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