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Hiccup In Economic Recovery, But Don't Panic

New orders for computers and related products dropped in November, but overall things are still moving in the right direction.

A hiccup in the economic recovery occurred Wednesday as the Commerce Department reported a 3.1% drop in new orders for durable goods in November. Some analysts had expected an increase in this preliminary number; durable goods orders had been rising in recent months.

Though not as dramatic, new orders for computers and related products also slipped in November, by 0.3%, following drops of 0.8% and 0.2% during the two previous months. And new orders for communications equipment plummeted 40% last month, after a few healthy months of increases.

Shipments of computer wares fell 2.4% in November, following two months of gains. By comparison, shipments of all durable goods inched ahead 0.1% in November. A positive sign, though, is that computer vendors are seeing their inventories decline, by 1.9% in November, following drops of 1.6% in October and 0.4% in September.

Economist James Forcier, managing director at economic consultancy Bay Analytics, says he finds the mixed economic reports issued recently puzzling. But he believes the overall economy and the IT sector will continue to rebound. "We shouldn't get too upset with any one data point," he says. "In the last recession, IT fell harder than other parts of the economy, and its comeback is tougher. But it's definitely moving in the right direction."

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