Washington, May 2 (Bloomberg) -- New orders placed with U.S. factories for goods otherthan transportation equipment fell in March for a fourth straight month, a sign manufacturingis still a weak link in the economy, government figures showed. Orders excluding transportation dropped 1.2 percent, the biggest decline since October,after falling 0.1 percent in February, the Commerce Department said. All factory ordersincreased 1.8 percent after a 0.1 percent decrease. The string of declines in orders excluding transportation equipment is the longest sinceNovember 1990 to March 1991, when the economy was in its last recession. Withcustomers pulling back orders, manufacturers are slowing production. ``We're anticipating much softer orders in the second half of the year,'' said David Farr, chiefexecutive of Emerson Electric Co., a maker of electronics and telecommunicationsequipment. ``We're seeing more of the effect of cancellations than we have of an absolutecollapse in new orders.'' Today's report also showed unfilled orders excluding defense hardware fell 0.1 percent, thethird straight monthly decline. That suggests orders for manufactured goods are easier to fillbecause demand has slackened. ``They aren't going to increase production until they see an improvement in demand,'' saidPeter Kretzmer, an economist at Banc of America Securities in New York. The Federal Reserve said in its latest regional economic report card that manufacturersreported falling orders and retailers signaled sluggish sales during March and April.Manufacturing ``continues to weaken across districts, with demand having fallen in mostindustries,'' the Fed's report said.
Treasury Securities
The U.S. Treasury's 10-year note were little changed to yield 5.29 percent after the reportbolstered investor optimism that Fed policy makers will reduce interest rates a fifth time thisyear at their meeting May 15. The Dow Jones Industrial Average fell 22 points, or 0.2percent, to close at 10876.68. The Nasdaq Composite Index rose 52 points, or 2.4 percent,to close at 2220.56. Orders for transportation equipment rose 24.8 percent, led by a surge in bookings for shipsand tanks. Defense orders jumped 64 percent, and orders for civilian aircraft rose 45.5percent. Boeing Co., the world's largest manufacturer of commercial aircraft, reported its total ordersincreased to 55 jetliners in March from 17 in February, according to the company's Internetsite. That was the largest number of new orders since 84 airplanes in November. Orders for automotive equipment rose 7.9 percent in March. Still, auto orders that monthwere 9.9 percent lower than they were in the same month last year.
Ford
Ford Motor Co. yesterday announced plans to reduce its second- quarter production 9.8percent from a year earlier as sales fell in April. The company's reduced production level is40,000 lower than the target announced last month. ``April auto sales suggest that consumer spending growth may have weakened comparedwith the first quarter,'' said Martin Inglis, vice president at Ford in a statement. Ford and General Motors Corp., the world's largest automaker, both sold 16 percent fewerNorth American-built cars and light trucks in April. The U.S. industrywide sales rate fell to16.3 million vehicles from 17.9 million in the same month last year. At the same time, General Motors stuck to its plan announced two weeks ago to increaseits second-quarter North American production schedule by 32,000 vehicles to 1.33 million,still a 15 percent decline from a year ago. Orders for all durable goods, big-ticket items intended to last three or more years, rose 3.5percent in March after falling 0.1 percent in February. Orders for non-durable goods --reported for the first time today -- fell 0.1 percent in March after falling 0.2 percent inFebruary.
Cutting Production
Faced with declining orders, excess inventories and a slowing economy, manufacturershave been cutting production. The economy grew at a 1.5 percent annual pace from Octoberthough March, the worst six-month performance since the first half of 1995, when growth fellto a 1.1 percent rate. Black & Decker Corp., the biggest maker of power tools, said last week that first-quarterearnings fell 30 percent and profit in the second-quarter and this year will be less thanforecast because of the slowing U.S. and European economies. The company said inventories grew by $34 million from the fourth quarter and it plans toslow production at some plants in the second quarter. Inventories at U.S. factories fell 0.6 percent in March after falling 0.4 percent in Februarywhile shipments rose 0.4 percent compared with a 0.4 percent decrease the previousmonth. That brought the inventory-to-shipments ratio down to 1.34 months from 1.35 the previousmonth, which matched January's and was the largest since February 1999. Unfilled ordersrose. Orders for non-defense capital goods excluding aircraft -- a gauge of business spending onnew equipment -- fell 1.8 percent in March after falling 5.4 percent in February. ViasystemsGroup Inc., which makes circuit boards, said last week it closed factories and cut jobs inresponse to a decline in orders. Viasystems said it expects demand for electronics to remain ``sluggish'' based ondiscussions with customers and other companies in the industry during the past threeweeks.