Factory Orders Rise, Auto Sales Down

Orders to U.S. factories bounced back a bit in November, rising 1.7 percent as demand grew for airplanes, electronics and industrial machinery.

But the best year ever for auto sales in the United States ended with a whimper as a slowing economy pushed December sales down about 8 percent.

The Commerce Department reported today that total factory orders rose to a seasonally adjusted $377.6 billion, up from $371.3 billion the month before. Many analysts were expecting factory orders to rise by 1.2 percent.

The rise was not enough to recover the 4.0 percent decline in orders in October. That revised figure was weaker than the government had previously reported.

In another report, the Labor Department said new claims for state unemployment insurance rose last week by 16,000 to a seasonally adjusted 375,000, the highest point in more than two years and suggesting that employers’ demand for workers is waning.

It marked a larger increase than some analysts were expecting and the highest level since July 4, 1998, when claims were at 384,000.

Tough Winter Ahead For Automakers

Not wanting the economic slowdown to slip into a recession, the Federal Reserve, in a surprise move Wednesday, cut short-term interest rates by a bold, half a percentage point. The action is designed to lower borrowing costs and spur business investment and consumer spending, thus boosting economic growth.

But despite the Fed’s bold move, automakers are bracing for a rough winter, with sales far below the pace set last year. DaimlerChrysler said Wednesday it would idle several plants in January to cut inventories, following a similar move Ford announced a few weeks ago.

Overall, automakers sold 17.4 million cars, pickups, vans, minivans and sport utility vehicles last year, beating their record of 16.9 million set in 1999. But the major U.S. manufacturers — General Motors, Ford Motor and the Chrysler side of DaimlerChrysler — saw sales decline in 2000 by 2 percent, as foreign automakers boosted sales and grabbed a larger slice of the market.

“At least as far as the auto industry is concerned, we’re in a recession,” said Burnham Securities analyst David Healy. “How long it’s going to go on no one can really say.”

GM said its December sales fell 18 percent, with a 16 percent decrease in car sales and a 20 percent decrease in light truck sales. Among its U.S. brands, only the Saturn division saw sales rise.

Chrysler said its sales fell 15 percent in December, with cars down 25 percent and trucks down 11 percent. The troubled automaker ended 2000 with sales down 4.4 percent. The company said it would conduct one-week shutdowns at eight of its 12 U.S. and Canadian factories in January to cut inventories.

But the bad news did not touch several foreign automakers. Toyota said its sales were up 14 percent in December and 10 percent for all of 2000. Honda said its sales for the month were up 2.6 percent, while Mazda said its December sales were up 20.5 percent on the strength of its new Tribute SUV.

Nissan sales were down 5 percent in December, but up 11 percent for the year. All three Korean automakers reported large gains for the month and year.

Retail Sales Also Weak Meanwhile, treacherous winter storms, and the slowing U.S. economy also thwarted retailers’ hopes for a profitable December. Weak sales hit all retail segments and were the latest sign that the economy is cooling.

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