WASHINGTON -- In further signs of a sluggish economy, orders to factories for manufactured goods were weak for a second consecutive month and service sector activity had its worst performance in more than three years.
New orders for manufactured goods stayed basically the same in August at $403.6 billion, on the heels of 1 percent plunge in demand in July, the Commerce Department reported yesterday. The August report showed big declines in demand for computers and commercial aircraft.
Also, a gauge of activity in the service sector, where most people work, fell sharply in September to 52.9, down from 57.0 a month before, according to the Institute for Supply Management. It was the poorest from the showing since April 2003 and was far below expectations.
Both reports supported the view that the economy is continuing to slow under the impact of weaker consumer spending and a cooling housing market.
On Wall Street, investors saw the lackluster economic news as further evidence that a slowing economy will keep inflation pressures at bay.
The Dow Jones industrial averaged soared 123.27 points to close at 11,850.61, its second consecutive record.
Many economists believe that growth in the just-completed July-through-September period will not match the spring's pace of 2.6 percent growth. That performance compared with the sizzling 5.6 percent growth from January through March.
The economic slowdown is expected to reduce pressures on inflation and not force the Federal Reserve's hand in again pushing rates higher this year.
Fed chairman Ben Bernanke said yesterday that a ``substantial correction" was underway in the housing sector which he estimated would shave about a percentage point from growth in the second half of this year.
Bernanke said the drag from housing would be partially offset by other factors, such as solid job creation and income growth. ``How far will this correction go? It is very difficult to tell, is the honest answer," Bernanke said in answering a question after a speech to the Washington Economic Club.