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To: Jim Willie CB who wrote (3772)	3/26/2003 9:21:54 AM
From: 4figureau	Read Replies (2) \| Respond to of 5423

U.S. Feb. Durable Goods Orders Fall 1.2%; Ex-Trans. Down 2.1% By Vince Golle Washington, March 26 (Bloomberg) -- U.S. orders for durable goods fell in February for the third month in four as bookings declined for automobiles and commercial aircraft, a government report showed. Orders for items made to last at least three years declined 1.2 percent to $170.2 billion after a 1.9 percent increase in January, the Commerce Department said. Excluding transportation equipment, bookings fell 2.1 percent after rising 1.2 percent. Leading up to the war with Iraq, companies were reluctant to place orders in the event consumer and business spending slowed. General Motors Corp. responded to reduced demand in January and February by trimming production plans. The economy stumbled last month, reflecting such steps, as manufacturing slowed, unemployment rose and retail sales fell. ``No one wants inventory on their shelves, and they won't start ramping up production until they know what their post-war business prospects are,'' said Bill Quan, director of research at Mizuho Securities USA Inc. in New York, before the report. Economists had forecast a 1.5 percent decline in durable goods orders to $172.2 billion for February after a previously reported 2.9 percent increase the month before, based on the median of 61 forecasts in a Bloomberg News survey. Estimates ranged from a drop of 4 percent to a rise of 1.5 percent. Orders to manufacturers may also have been hurt by a snowstorm in mid-February that brought business in the northeast U.S. to a halt. Inventories of durable goods fell 0.1 percent last month, today's report showed, the 24th decline in the past 25 months. The report no longer includes semiconductors because chipmakers such as Intel Corp. stopped participating in the survey. Concern About Inventories ``People are awfully concerned about excess inventories,'' said Michael Eskew, chairman and chief executive of United Parcel Service Inc., the world's largest package-delivery company, in an interview yesterday. ``People are saying, `I need to know what's coming to me today, what's in the back room and what's coming on a truck.''' Orders for motor vehicles and parts fell 1.5 percent after surging 9.9 percent in January. The decrease in orders came after car sales fell to a 15.4 million-vehicle annual rate in February, the slowest in five months. January sales also cooled. Ford Motor Co. said earlier this month that it plans to cut North American production 17 percent in the second quarter. The No. 2 automaker's reduction is the largest since a 23 percent cut in the third quarter of 2001, after the terrorist attacks. The company follows bigger rival General Motors in reducing output after U.S. automakers bolstered inventories last year to meet demand spurred by rebates and low-interest loans. Lower Auto Sales U.S. auto sales dropped 7 percent in February, as Ford sold 200 fewer vehicles and sales at General Motors declined 19 percent. General Motors said it intended to cut second-quarter production 10 percent. Bookings for commercial aircraft and parts plunged 26.4 percent after slumping 24.5 percent in January. Boeing Co., the world's biggest aircraft maker, said it received orders for four planes in February, down from 24 the previous month and the fewest since September. All the planes were ordered by foreign customers. Orders for non-defense capital goods excluding aircraft, a proxy for future investment, decreased 2.8 percent in February. Shipments, which the government uses to help construct quarterly gross domestic product measures, fell 3 percent after rising 3.5 percent. ``Many companies may have deferred investment plans as the outbreak of war with Iraq became imminent,'' said Lynn Reaser, chief economist at Banc of America Capital Management in St. Louis, before the report. Computers, Electronics Orders for computers and electronic products fell 2.9 percent after rising 2.1 percent. Communications equipment orders dropped 4.4 percent. In January, orders in that category surged 32.6 percent. Solectron Corp., the world's No. 2 maker of electronics for brand-name companies, reported last week its ninth straight quarterly loss as clients including Hewlett-Packard Co. scaled back orders. Bookings for electrical equipment, appliances and components fell 1.9 percent after declining 2 percent. The buildup for war with Iraq and efforts to root out terrorism have boosted military spending. The government spent 28 percent more for defense equipment last month after reducing outlays 3.4 percent. Compared with February of last year, defense capital goods purchases were up 22.5 percent. Economists expect the economy to pick up in the second half of the year, based on projections that business spending will revive and that the war in Iraq will be short-lived. Forecasters say that growth will quicken to a 3.7 percent pace in the year's final three months, according to the median of 71 estimates in a Bloomberg News survey. That would be almost double the expected 2 percent annual rate forecast for the current quarter. quote.bloomberg.com