Factory Orders Hit 7-Year Low, Signaling Effects Of Housing Spreading To Manufacturing

Washington, DC (AHN) - According to the Commerce Department, factory orders in August declined by the largest margin in seven months, mounting evidence that weakness emanating from credit markets has spread into manufacturing.

Orders to factories fell 3.3 percent - the biggest fall since orders dropped 4.2, early this year in January.

A major factor in the decline was fewer orders for commercial aircraft, which slid a whopping 40 percent for the month.

Analysts say that the data points to a slowing economy in the wake of a global credit crisis.

Transport-related orders dipped 11.1 percent, while automotive orders were lower by 8.5 percent. Similarly, household-related items were also significantly lower with home appliances down 7.2 percent and furniture down 4.4 percent.

Dwindling demand in household items reflects the weakness in the housing sector, which in turn lead to the credit crunch, as more and more people defaulted on mortgage loans.

Charles Lieberman, chief investment officer at Advisors Capital Management tells BBC News that factory orders are not as significant as the jobs data to be outed Friday.

"I don't think factory orders are a significant new indication of weakness," said Lieberman.