Factory Orders Fall 2.3 Percent
May 26, 1999
Filed at 10:59 a.m. EDT
By The Associated Press
WASHINGTON (AP) -- Orders to U.S. factories for
big-ticket manufactured goods fell a sharp 2.3
percent in April, the second drop in the past three
months, led by a steep decline in demand for autos
and other transportation equipment.
The Commerce Department said today that orders for
durable goods, items expected to last three or more
years, declined by $4.5 billion last month to a
seasonally adjusted $194.4 billion.
The 2.3 percent decline followed a solid 2.7 percent
increase in March and was the biggest setback since a
3.9 percent fall in February.
The big drop off caught analysts by surprise. They
had been expecting a 0.4 percent gain in durable
goods orders for April, reflecting strength in the
overall economy.
The stock market, which had suffered four straight
losing sessions over growing concerns that the U.S.
economy might be overheating and causing inflation
to rise, viewed today's decline in factory orders as a
welcome sign of a slowing economy.
''The fundamental message of these numbers is that
the economy is undergoing a mild slowdown,'' said
economist Jerry Jasinowski, president of the
National Association of Manufacturers. ''The
economy is coasting to a more sustainable pace
following two quarters of unusually strong growth.''
Treasury Secretary Robert Rubin cautioned against
reading too much into any one economic report. ''I
continue to think that our most likely track is what I
have said many times before, low inflation and solid
growth,'' he told reporters at Treasury.
Despite the fact that a global currency crisis has
pushed one-third of the world into recession, the
U.S. economy has been forging ahead, bolstered by
the lowest unemployment rates in three decades and
strong consumer spending in such areas as housing.
However, American manufacturers and farmers have
been battered by the global trouble as they have
suffered steep declines in their exports that have sent
the U.S. trade deficit to record levels.
The loss of export markets and increased
competition from lower-priced imports has
contributed to a drop of more than 400,000 jobs in
manufacturing over the last year.
One of the industries suffering the most has been
steel, which has seen a flood of cheap imports from
countries such as Japan. But in today's report, the
government offered a glimmer of hope that the worst
may be over.
Primary metals, the sector which includes steel, saw
orders increase by 1.3 percent in April following a
0.6 percent decline in March.
Overall, the 2.3 percent April drop in durable goods
orders was led by a sharp 12.4 percent fall in demand
in the transportation sector, which the government
said included decreases in all components including
autos and aircraft.
Excluding the big drop in the transportation, orders
would have risen by 0.9 percent. That compared to a
2 percent increase excluding transportation in March.
Orders for industrial machinery rose by 3.5 percent
in April, the fourth increase in this sector in the past
six months.
Orders for electronic and other electrical equipment
were down 0.7 percent in April following a big 4.5
percent March increase.
Shipments of big-ticket durable goods, a good sign
of current demand, were down 0.6 percent in April
after having risen 1.9 percent the previous month. |
