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Nation's Factory Output Down Third Straight Month : Commerce: Economists blame surprising decline on manufacturers curbing output to trim unsold stocks.

July 01, 1993|From Reuters

WASHINGTON — Orders received by the nation's factories tumbled in May for the third straight month to the lowest level since November, the Commerce Department said Wednesday.

The surprising 1.4% decline in May orders followed a revised 0.3% decrease in April orders. The April drop previously was reported as 0.1%.

Economists said manufacturers again curbed output to trim stocks of unsold goods, which grew for the fourth consecutive month.

They also blamed the drop on weak demand for U.S. exports and a reluctance among businesses to purchase big-ticket items because of uncertainty over President Clinton's economic program.

"U.S. manufacturing is stagnant at this time," said Allen Sinai, chief economist at Economic Advisers Inc. "Manufacturing has been dragging the economy down."

Economists had expected factory orders--which include everything from diapers to missiles--to decline 0.8% in May. Orders have dropped in four of the last five months, and the string of three consecutive declines was the first since the three months ending in March, 1991.

May's level of orders--$249.3 billion, adjusted for seasonal factors--was the lowest since November of last year, when they were $244.0 billion. But orders were still up 4% from May, 1992.

The drop in orders offers more evidence that the economy is growing only modestly. The Commerce Department said this week that sales of new homes nationwide saw their biggest drop in May in 13 years, and the government's key economic forecasting gauge slipped.

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