U.S. Factory Orders Fell 0.5 Percent in June

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By MARTIN CRUTSINGER, Associated Press

WASHINGTON (AP) — Companies placed fewer orders with U.S. factories in June from May, signaling further weakness with manufacturing.

The Commerce Department said Thursday that factory orders fell 0.5 percent in June, the third decline in four months.

Orders for core capital goods, considered a good proxy for business investment, dropped 1.7 percent. Demand fell for heavy machinery and computers.

Manufacturing has been a key source of growth in the U.S. since the recession ended in June 2009. But in recent months, factory activity has weakened along with the broader economy.

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U.S. factory orders in June totaled $465.8 billion, up 42.5 percent from the recession low hit in March 2009.

Demand for long-lasting goods, items such as autos and airplanes, increased 1.3 percent in June. Demand for non-durable goods such as petroleum products, fell 2 percent.

Job growth has slumped since March, leading U.S. consumers and businesses to cut back on spending, That has lowered demand for factory goods. Europe's economic woes and slower growth in China, India and Brazil have also reduced demand for American exports.

The weaker economy is affecting factories. U.S. manufacturing shrank for the second straight month in July, according to a survey by a trade group of purchasing managers.

Overall economic growth slowed to an annual rate of just 1.5 percent in the April-June quarter, down from an already lackluster 2 percent growth rate in the January-March quarter.

The economy isn't growing fast enough to lower the unemployment rate.

The Labor Department reports on July unemployment and job growth Friday. Economists predict employers added 100,000 jobs last month. That would be slightly better than the 75,000 a month average from April through June but still below the healthy 226,000 average in the first three months of the year. The unemployment rate is expected to stay at 8.2 percent.

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The Federal Reserve cited the weaker growth in a statement Wednesday in which Fed officials repeated a pledge to try to boost growth in hiring remains weak. The Fed statement noted that growth has slowed in the first half of the year with job creating slackening and consumer spending tapering off.

Many economists believe the Fed will launch another round of bond buying at its September meeting in an effort to give the economy a boost by pushing long-term interest rates lower.

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