Durable Goods Orders Rise 0.8% in March

Orders to U.S. factories for “big ticket” durable goods posted a moderate gain in March, the government reported Tuesday, but analysts said the increase reflected a surge in aircraft orders that masked a broader slowdown in the economy.

The Commerce Department said total orders for durable goods rose 0.8% to a seasonally adjusted $124.9 billion last month, with virtually all of the increase attributed to a jump in demand for transportation equipment.

Excluding the transportation category, which is subject to wide swings depending on when big contracts are signed, orders were down 2.8% in March, the third straight monthly decline.

‘Soft Landing’

Analysts said the figures were consistent with recent government reports which suggest that economic growth is slowing as the record peacetime expansion extends into its seventh year.

“This definitely should tell even the biggest skeptic that the slowdown’s arrived,” Maury Harris, chief economist for Paine Webber Inc., said of the latest report. “Anybody who says monetary policy hasn’t affected the economy is just crazy.”

The Federal Reserve Board for a year has been pushing up interest rates in an effort to slow the economy and thus restrain inflation, although some analysts have expressed concern that the Fed’s actions could unintentionally topple the country into a recession.

Economist Priscilla Trumbull of the WEFA Group in Bala-Cynwyd, Pa., said the Fed still should be able to engineer a “soft landing” in which growth slows enough to cool inflation without causing an economic downturn.

Trumbull said the weakness in manufacturing orders “is probably one of the best things that could happen for the economy” because it reduces concern that factories will overheat and face shortages that would drive up prices.

In March, transportation orders rose 10.4% while most other industry categories posted declines.

DURABLE GOODS

March, 1989: up 0.8% to $124.9 billion

Source: Commerce Department