Page last updated at 15:39 GMT, Thursday, 26 February 2009

US factory orders decline again

Machinary
Durable good orders have now fallen for six months in a row

US orders for long-lasting manufactured goods fell by more than expected in January as the global economic downturn continued to bite.

New orders for durable goods fell 5.2%, official data showed, the sixth month in a row the figure has fallen.

Orders for cars, machinery, metal products and household appliances were the worst affected.

Meanwhile, updated figures for December showed a 4.6% drop in orders, worse than the 3% fall originally estimated.

Gloomy picture

January's figures were much worse than analysts had been expecting. They had forecast a 2.5% decline.

The six straight months of declines in durable goods orders highlights the severity of the continued global economic downturn. The record for a string of consecutive monthly falls had stood at four months and was set in 1992.

Consumers are rapidly reining in their spending as they face rising costs and uncertainty about their jobs, and so purchases of big-ticket items such as cars are subsequently being affected.

On Thursday, struggling US carmaker General Motors announced a $9.6bn (6.7bn) loss in the fourth quarter, pushing its net 2008 losses to $30.9bn.

Furthermore, the collapse in the US's housing market has had a detrimental effect on demand for products from manufacturers such as furniture and carpet suppliers. Equally cautious foreign consumers mean that international demand for the US's products has also weakened.

On Friday, the government will release updated figures on how the US economy performed during the final three months of 2008.

Analysts now believe the US economy contracted at a pace of 5.4% in the last three months of 2008, significantly higher than the estimate of a 3.8% annualised drop made a month ago.



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