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Orders to factories fall short

The small rise in goods ordered and more jobless filings reflect the strained economy.

WASHINGTON - Orders to U.S. factories for costly manufactured goods rose only marginally in November, falling short of expectations and underscoring the strains on the economy from housing and credit problems.

The Commerce Department reported yesterday that orders for durable goods - products expected to last at least three years - increased just 0.1 percent last month. The tiny rise came after durable-goods orders fell 0.4 percent in October.

Economists were hoping for a larger rebound - a 2.2 percent increase - in orders placed at the nation's factories in November. Still, the rise marked the first increase in durable-goods orders in the last four months.

In other economics news, more people signed up for unemployment benefits in the week ended Saturday, a sign that the job market is softening as the economy loses speed.

The Labor Department reported that new applications for unemployment insurance rose a seasonally adjusted 1,000 to 349,000. Economists had expected new filings for jobless benefits to dip to around 340,000 for last week.

"Now that business spending is also losing momentum, the risk of recession is mounting," said Michael Gregory, economist at BMO Capital Markets Economics.

In the factories report, demand for manufactured goods, excluding transportation equipment, fell 0.7 percent in November. It was the second straight monthly decline.

Orders for machinery, computers and electronic products, communications equipment, defense aircraft, and fabricated metal products all posted declines in November.

However, those losses were more than offset by gains in demand for electrical equipment and appliances, automobiles, commercial airplanes and primary metals, including steel. That led to the small rise in overall durable-goods orders in November.

Demand for capital goods, excluding aircraft - a category considered a good proxy for business investment - fell 0.4 percent in November. It was the second month in a row that this category posted a decline.

Nigel Gault, economist at Global Insight Inc., pointed to this drop as an indication of "increased caution among businesses as financial conditions tighten and the economy slows."

With jobless claims drifting higher, "it seems that businesses are becoming more cautious on both capital spending and hiring," he added.