Durable Goods Orders Up Modest 1% in April

Orders for “big ticket” durable goods rose 1% in April, the government reported Wednesday. The modest increase was the first in three months, but many economists said it will take a more substantial rebound to bring relief to America’s ailing industrial sector.

At the same time, the F. W. Dodge division of McGraw-Hill Information Systems reported that construction of new housing units fell 13% in the first three months of the year, compared to a year earlier.

The Commerce Department reported that orders for manufactured durable goods, boosted by demand for military hardware, totaled $100.7 billion last month, a $1-billion improvement over March.

Slower Growth Rate

New orders for durable goods fell 2.7% in March and 2.8% in February. Since last spring, new orders have been decidedly weaker as U.S. industry has seen sales slip away to foreign competitors because of the high value of the dollar against other currencies.

This sales loss has dragged down overall economic growth, which slipped to an anemic 0.7% annual rate in the first three months of this year, the government reported Tuesday. This is the slowest growth rate since the end of the 1981-82 recession.

While declining interest rates sparked a stock market rally early in the week on investor hopes of an economic rebound, many analysts believe the slowdown is not yet over.

Several analysts said the slight gain in orders for durable goods in April is another sign that growth in the April-June quarter will be less than robust.

“Industries which compete with foreign producers are showing broad-based weakness,” said Joseph Carson, senior economist at Merrill Lynch. “Widening trade deficits are taking the momentum out of the economy. The downward trend in interest rates will improve business conditions by year-end or early 1986 but probably not before.”

Carson predicted that economic growth will bounce back to perhaps a 3% annual rate this quarter but then edge back down to about 2% for the rest of the year.

On the housing front, the Dodge report said new housing starts amounted to 364,740 units from January through March, down from 419,074 units started during the same months of 1984.

The Los Angeles-Long Beach area led the nation’s metropolitan areas in new housing starts with 11,561 in the first quarter, up 40% from a year ago.

In a related development, the National Assn. of Realtors reported that half of all homes in greater Orange County--the Anaheim-Santa Ana area--cost more than $132,000, down 1.1% from a year ago but up slightly from three months ago.

By comparison, half of the homes sold in the first quarter of 1985 in the Buffalo-Niagara Falls area of Upstate New York went for less than $46,900.

On the high end of the scale, the New York City area was at $125,400; greater Los Angeles was at $114,300, and Boston with a median of $108,600 joined Orange County in the six-figure range.