June Factory Orders Climb 1.7% on Strength of Foreign Demand

Orders for manufactured goods climbed 1.7% in June, the fifth consecutive monthly increase, as U.S. factories continued to reap the benefits of rising foreign demand, the government reported Friday.

The Commerce Department said orders for both durable and non-durable goods totaled a seasonally adjusted $204.8 billion in June following a 0.4% increase in May.

A rise in orders for factory goods, which often signals increased production and employment in manufacturing industries, is considered a good barometer of future economic prospects.

Robert Ortner, undersecretary of commerce for economic affairs, said that orders for durable goods, items expected to last three or more years, climbed by 6.3% during the April-June period, the best quarterly performance in more than three years.

“A good part of the increase is coming in foreign orders, which reflects the decline in the dollar,” Ortner said.

Private economists agreed that the lower dollar is boosting export sales.

“We are clearly getting a turnaround. With the dollar becoming more competitive, we are picking up many more orders both from domestic buyers and also overseas,” said David Wyss, an economist with Data Resources Inc. of Lexington, Mass.

The Administration in 1985 began a two-year effort to push the value of the dollar lower as a way to trim the U.S. foreign trade deficit. A lower dollar makes imports more expensive while lowering the cost of American goods on foreign markets.

The dollar devaluation drive took longer than expected to bear fruit, but the Reagan Administration is still counting on a narrowing of the trade deficit to dampen protectionist demands in Congress.