Factory Orders Surge, But NAM Discounts Significance

By John S. McClenahen New orders for manufactured goods surged 7.1% to $333.2 billion in October, the first increase in this economic indicator since this past May and a dramatic contrast to September's 6.5% decrease. However, David Huether, chief economist at the National Assn. of Manufacturers, Washington, discourages any thoughts that a general economic rebound is getting underway. "Most of the rise in new orders is due to the current war raging in Afghanistan -- not to a general revival in business activity," he says. By his calculations, overall new orders rose only 3.3% when new orders for defense goods are subtracted from the total. And most of the 3.3% is accounted for such sectors as communications equipment and computers, which are experiencing increased demand as companies look for alternatives to traditional business travel, says Huether. "A general turnaround in manufacturing production is not in the cards for the fourth quarter [of 2001] and will not likely take place until the second quarter of 2002 at the earliest," he insists.

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