Durable Goods Orders Jump 5.9% in Month

A surge in defense buying and a last-minute rush to take advantage of expiring tax breaks turned what would have been a small gain in November orders for durable goods into a strong 5.9% jump in major factory orders, the government reported Tuesday.

However, because the strength was limited to those two areas, analysts generally dismissed the big gain as telling little about future economic growth. Overall factory orders fell 4.7% in October and rose 4.7% in September--fluctuations attributed to the ebb and flow of Pentagon orders.

Excluding defense buying in November, orders for durable goods rose only 0.6% after having declined 1.3% in October and rising 4.6% in September.

The November increase represents a $6.1-billion rise to a record $109.68 billion in orders, according to the Commerce Department’s Census Bureau. It was the largest increase in durable goods since an 8.2% rise in November, 1984. (Durable goods include large appliances and other goods designed to last three years or more.)

Expects Wide Swings

“There isn’t anything of consequence in this report to get excited about,” said Jerry Jasinowski, chief economist for the National Assn. of Manufacturers. He predicted that the boom in orders would be short-lived.

“We will see some very sharp swings in the economy between the fourth quarter of 1986 and the first quarter of 1987 because tax reform is going to be a big negative on business capital and consumer spending,” Jasinowski said. Overall economic growth will dip to an annual rate of around 1% in the first quarter of the year, he predicted.

On the other hand, Allen Sinai of Shearson Lehman Bros. called the increase in factory orders, even without defense buying, “encouraging.” He said it was “another sign that the economy was strong in November and that the industrial sector has seen the worst.”

Michael Evans, head of a Washington consulting firm, was far more pessimistic, forecasting that the gross national product would actually suffer a 1% decline in the first three months of next year.