Military aircraft leads drop in durable-goods orders

Associated Press WriterWASHINGTON (AP) -- Orders to U.S. factories for costly manufactured goods fell by 4.8 percent in November, reflecting a big drop in demand for military airplanes. However, orders for many other big-ticket items, including computers and industrial machinery, were higher.

The drop in durable goods -- items expected to last at least three years -- came after new orders soared by 12.5 percent in October, the Commerce Department reported Friday.

Virtually all the weakness in November came from a 57.9 percent drop in new orders for airplanes, mostly stemming from slackened demand for defense aircraft and parts, the government said.

That masked gains elsewhere.

Excluding the volatile transportation category, which can swing widely from month to month, durable-goods orders rose a solid 1.1 percent, the first back-to-back increase since November-December 1999.

New orders for automobiles rose a strong 4.5 percent in November, on top of an 11 percent increase in October. Free financing for cars and trucks has been a main factor behind stronger sales in the last couple of months.

Orders for computers and electronic equipment grew by 2 percent, following an 8.9 percent advance in October. Demand for computers and semiconductors rose, while orders for communications equipment dipped.

Electrical equipment and household appliances saw orders increase by 2.6 percent in November, after a 4.5 percent gain. Orders for primary metals, including steels, rose 1.4 percent, following a 2 percent decline.

Shipments, a good barometer of current demand, edged up by 0.2 percent in November, led by a big jump in shipments for automobiles and car parts. In October, shipments rose 3.4 percent.

The nation's manufacturing sector has been hardest hit by the sour economy, which tipped into recession in March. To cope, factories have sharply cut production and laid off workers.

The Federal Reserve, in an effort to revive the economy, has cut interest rates 11 times this year. The Fed hopes that the reductions -- which pushed borrowing costs to their lowest level since November 1965 -- will induce consumers to spend and businesses to invest.

Many economists project the Fed's aggressive action will help bring about an economic recovery by the spring.

In another report, new claims for unemployment insurance rose last week by a seasonally adjusted 7,000 to 392,000, the Labor Department reported.

The smaller-than-expected rise may have been affected by an upcoming policy change in California, where residents are to receive an increase in unemployment benefits early next year. That may have prompted some laid-off workers to delay filing new claims, a government analyst said.