Businesses Likely Cut Back On Factory Orders In June

WASHINGTON (AP) — Businesses probably cut back on orders to U.S. factories in June as manufacturing slowed along with the rest of the economy. Factory orders were expected to decline 0.8 percent in June, according to a survey of economists by FactSet. The Commerce Department will release the new report at 10 a.

WASHINGTON (AP) — Businesses probably cut back on orders to U.S. factories in June as manufacturing slowed along with the rest of the economy.

Factory orders were expected to decline 0.8 percent in June, according to a survey of economists by FactSet. The Commerce Department will release the new report at 10 a.m. EDT Wednesday.

In May, total orders rose 0.8 percent as businesses requested more airplanes, autos and drilling equipment. Last week, the government reported that orders for durable goods, items expected to last at least three years, fell 2.1 percent in June.

The new report will update the estimate for durable goods and include demand for nondurable goods, products such as chemicals, gasoline, paper and food.

The weakness in long-lasting manufactured goods showed cutbacks in orders for aircraft, autos, heavy machinery and computers. A key category that tracks business investment plans fell 0.4 percent in June.

Manufacturing has been a standout performer in the two-year-old recovery. But activity slowed in the spring, reflecting in part supply disruptions following the March earthquake and tsunami in Japan. Manufacturing was also hurt by the hit the overall economy took from higher energy prices which dampened consumer demand.

On Monday, the Institute for Supply Management reported that its closely watched gauge of manufacturing activity slowed in July to a reading of 50.9, down from 55.3 in June. While any reading above 50 indicates expansion, the July performance was the weakest since July 2009, the first month of the economic recovery.

Analysts expect manufacturing and the overall economy to rebound in the second half of the year as energy prices stabilize and Japanese factories get back to normal production.

But this view could prove too optimistic if U.S. consumers don't start spending more freely. A report Tuesday showed that consumers cut back on spending in June for the first time in nearly two years while their incomes grew by the smallest amount in nine months.

There is a growing concern that the economy could be at risk of slipping into another recession.

Economic growth nearly stalled in the first six months of this year, the government reported Friday. The overall economy grew at a 1.3 percent annual rate in April through June and that followed an even more anemic 0.4 percent increase in the first three months of the year. That was the slowest six-month period six the recession ended two years ago in June 2009.

Many economists believe economic activity will accelerate only modestly in the second half of the year with some expecting growth of around 2.5 percent in the final six months. That would be far below the pace needed to make a significant dent in the unemployment rate, which in June rose to 9.2 percent, the highest in a year. The government will release the July figure on Friday.

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