Durable Goods Orders Jump 6.4% in Month

Orders to factories for “big ticket” durable goods rose at a robust 6.4% pace in December, the government said Thursday in a report that analysts cited as evidence of unabated economic strength heading into the new year.

The surprisingly strong increase was the biggest since an 8.7% rise last June and brought demand for durable goods, items expected to last three or more years, to a seasonally adjusted $130.85 billion in December.

The figures reflected widespread demand in both civilian and military categories. Non-electrical machinery was the only category to post a decline.

Cynthia Latta, an economist with Data Resources Inc. in Lexington, Mass., said the report indicates that “so far, there’s certainly not any signs of slowdown” in the economy.

But she cautioned: “While it’s very strong on the surface, the disturbing undertone is that machine orders were off.”

Expects Slower Pace

December’s orders closed out the year on a strong note, with demand over the last 12 months totaling $1.43 trillion, a 10.8% increase from 1987, when orders had been up 7.6% over the previous year.

Economist John Hagens of the WEFA Group in Bala-Cynwyd, Pa., said the health of the U.S. manufacturing industry in 1988 showed that, “at a good price, U.S. goods can hold their own in the world market.”

Hagens said that with the dollar unlikely to fall further, “the phenomenal growth in orders and exports generally is not going to be there for 1989” but that orders still should come in at a moderate pace.

December’s increase in orders for durable goods was paced by a huge jump in the volatile military category, which oscillates depending on when big government contracts are signed. Military orders increased 21.1% last month to a seasonally adjusted $10.16 billion after a 21.5% decrease in November.