Factory Orders Rise, Auto Sales Down

W A S H I N G T O N, Jan. 4 -- Orders to U.S. factories bounced back a bit inNovember, rising 1.7 percent as demand grew for airplanes,electronics and industrial machinery.

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

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

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

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

It marked a larger increase than some analysts were expectingand the highest level since July 4, 1998, when claims were at384,000.

Tough Winter Ahead For Automakers

Not wanting the economic slowdown to slip into a recession, theFederal Reserve, in a surprise move Wednesday, cut short-terminterest rates by a bold, half a percentage point. The action isdesigned to lower borrowing costs and spur business investment andconsumer 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 similarmove Ford announced a few weeks ago.

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

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