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Politics : Idea Of The Day

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To: Jerry Olson who wrote (19637)	8/30/1998 11:19:00 AM
From: IQBAL LATIF	of 50167

OJ-- Look at this report I just don't see that big affect in the economic numbers we are getting- firstunion.com Durable Orders (July) Underlying Domestic Demand In Manufacturing Appears To Be Strong August 26, 1998 Recent reports have suggested that the manufacturing sector is experiencing a sharp slowdown and may enter a period of outright decline. These assessments are largely based on sinking Asian demand for U.S. exports. It may be a bit premature to write off manufacturing activity, as strength in private domestic demand seems to be offsetting a good chunk of the declines in manufactured goods for export. New orders for durable goods jumped 2.4% in July following a 0.2% rise in June. The July strength in new orders was somewhat surprising given that the GM strike had an enormous impact on motor vehicle manufacturing activity during the month and probably distorted the orders and shipments data. New orders for transportation equipment managed to rise 0.3% in spite of the strike, as rising orders for aircraft and parts offset declines in the motor vehicle industry. Excluding transportation, new orders surged an even stronger 3% in July on top of a 2.4% gain in June, representing the seventh increase in the last eight months. A 12% surge in orders for electronic and other electrical equipment was largely responsible for the strength in new orders. This sector includes semiconductors and electrical transformers. The industrial machinery sector experienced a 2% gain in orders following a 1.7% increase in June. New orders for nondefense capital goods excluding aircraft, a future gauge of capital equipment spending, fell 1.5% in July suggesting that some slowing may be occurring. We, however, need to keep in mind that monthly durable orders data is volatile and there may have been some pullback as a result of UAW strikes. The drop also followed a robust 3% rise in June and the trend remains firmly positive. Private domestic demand is supporting economic activity and rising durable orders growth supports an expanding manufacturing sector. Veronika White, Economist (215) 786-2026 or e-mail to veronika.white@capmark.funb.com

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