U.S. factory orders fall as bad economic news piles up

New orders for U.S. manufactured goods fell by a larger-than-expected amount in October as the outlook of American executives for the next half-year darkened, according to two separate reports released Thursday.

The U.S. Census Bureau said American factory orders dropped by 5.1 per cent in October, the third straight monthly decline for this indicator and a steeper drop than the 4.5 per cent economists had expected.

Overall, new orders for U.S. finished goods fell by more than $21 billion US in the month, to $407 billion US, or, in one month, 85 per cent of Canada's total manufacturing sales for all of 2007.

September was only marginally better as new factory orders in that month fell by 3.1 per cent.

Darkened economic skies

These manufacturing numbers are another bit of evidence — if any was needed — that the American economy is in grim shape.

The country's major business heavyweights certainly believe the financial meltdown is real.

The Business Roundtable, an organization representing U.S. chief executives, said Thursday the economic outlook of its members for the next six months has plunged.

The group's outlook index fell to 16.5 in terms of sentiment for the last part of the year and the first three months of 2009.

That compares with 78.8, the level for the previous survey which examined sentiment for the July-to-December period.

The index looks at how these executives view sales, employment and capital spending in the coming two quarters. Because of the way the group does the math, the survey's results can range between minus 50 and a positive 150, with the index centred on 50.

"As economic conditions continue to soften, so have our member CEOs' near-term expectations," said Harold McGraw, the chair of the Business Roundtable.

Buyers' outlooks fade to bleak

Earlier in the week, economy watchers were subjected to more bad news as the U.S. index of intentions of purchasing managers plummeted to 36.2 in November, the lowest reading of this forward-looking indicator since 1982.

Worse still, predictions in November for new orders fell to 27 per cent, about half of the indicator's level in November 2007.

"The U.S. economy is in a deep recession, with no end in sight," said Sal Guartieri, an economist with BMO Economics commenting on the report.

In addition, the so-called Beige Book of the U.S. Federal Reserve Board, which describes how governors of the American central bank view the economy, turned black in its latest incarnation.

"Overall economic activity weakened across all Federal Reserve districts since the last report," said the report on Wednesday.

The governors were discussing economic conditions across the United States prior to Nov. 24.