Orders for big-ticket goods were flat in December after taking a 2.3 percent dive in November, highlighting the struggles America’s manufacturers are encountering as they try to get on firm footing.
The Commerce Department report Wednesday disappointed economists, who were forecasting a solid 2 percent rebound in orders for durable goods–manufactured items expected to last at least three years.
“This will take a little of the air out of the view that the economy grew at around 5 percent last quarter,” said Ethan Harris, chief economist at Lehman Brothers Inc. in New York.
“This is a big blow to the view that consumers were passing the baton to business investment in keeping the economy growing,” Harris said.
But some economists continue to be hopeful that the two months represent a rough patch, rather than a signal of new trouble ahead for manufacturing and the national economy.
“I think it is a two-month pause,” said Mark Zandi, chief economist at Economy.com in West Chester, Pa.
“But having said that, I am a bit puzzled we didn’t see better numbers. It’s disappointing coming off a huge decline in November. I was expecting a bit of a rebound,” he added.
Some analysts said companies may have been wary of letting inventories pile up faster than sales.
“It appears that some of the softness in order activity during November and December represents a payback for unsustainably sharp gains in prior months,” said David Greenlaw, chief U.S. fixed-income economist at Morgan Stanley.
Manufacturing has struggled since July 2000, losing 2.8 million jobs in that span.
But for all of 2003, orders for durable goods rose 2.8 percent, the largest increase since 2000, when orders increased 3.3 percent.
“Businesses have cash. Profitability is good. Everything argues for much better business investment in coming months,” said Zandi.
