January Factory Orders Take Worst Fall Since 1974

Orders to factories for manufactured goods took their biggest plunge in more than 15 years in January, the government said Tuesday. Analysts described the 5.4% drop as temporary.

The Commerce Department said orders for durable and non-durable goods fell to a seasonally adjusted $227.7 billion, the steepest drop since the 7% of December, 1974.

A sharp 10.5% January decrease in durable goods orders, to $117.8 billion, led the plunge.

A 28.8% drop in transportation orders accounted for 85% of the durable decline, said economist Michael P. Niemira of Mitsubishi Bank in New York.

“Obviously, if 85% of it is in transportation, that doesn’t say it is widespread,” Niemira said.

Auto makers laid off 90,000 workers in January while they attempted to shrink bloated inventories but most workers have returned and, Niemira said, motor vehicle production increased 30% in February.

Also down in January were aircraft orders, which showed huge increases the previous two months, and defense orders.

“Aside from those three sectors, basically industry is showing a modest pace of growth,” said economist Priscilla Trumbull of DRIMcGraw-Hill in Lexington, Mass.

FACTORY ORDERS

Total new orders in billions of dollars, seasonally adjusted. Jan.,’90: 227.7. Dec.,’89: 240.8. Jan.,’89: 236.1.