1988 Factory Orders Post Sharpest Gains Since ’79

Factory orders shot up 4.1% in December as American manufacturers, bolstered by a boom in export sales, last year posted their best showing since 1979, the government said Friday.

The Commerce Department said orders for durable and non-durable manufactured goods reached a seasonally adjusted total of $237.6 billion in December after making more modest gains of 0.5% in November and 2% in October.

While many analysts are expecting economic growth to slow during the coming year, 1988 closed on a strong note, with many year-end reports showing vigorous activity in December.

December’s rise, much of it pinned on increased orders for cars, ships and planes, was the biggest monthly gain since a 5.4% increase in June.

Orders for manufactured goods were up a strong 9.7% to $2.66 trillion for all of 1988, the best showing since a 12.1% increase in 1979.

“The overall picture is of an economy that is quite buoyant, robust, humming along,” said Boston Co. chief economist Allen Sinai.

Factory orders also had been up sharply in 1987, rising 7.1% after falling 1.2% in 1986 and 0.6% in 1985.

American manufacturers rebounded in the last two years as the decline of dollar against foreign currencies made American products more competitive overseas. In the previous two years, manufacturers had lost both domestic and overseas sales to foreign manufacturers.

Robert Brusca, chief financial economist for Nikko Securities Co. International in New York, said that while the latest factory orders report was positive, “we are not producing goods at a rapid enough rate to make progress on the trade deficit.”