In a sign of a slowing economy, factory orders edged up only 0.8% in March, after a 1.3% gain in February, according to the Census Bureau, while manufacturing inventories increased by only 0.2%.

Continuing a recent trend, shipments again outpaced orders. As a consequence, unfilled orders fell for the second straight month. "Shipments cannot outpace orders forever and should soon start to slow," said Stan Shipley, senior economist at Merrill Lynch & Co.

He said inventory data should be viewed with care. "Prices of manufactured goods are falling, and as a result, the real inventory accumulation is greater than the nominal gain."

Mr. Shipley said the Merrill economics group forecasts "slower inventory accumulation, a deteriorating trade position, and more moderate consumer spending to bring second-quarter economic growth to around 1.5%."

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