‘Big Ticket’ Durable Goods Orders Drop : Economy: Fall of 4.1% shows ‘planners are still insecure about the future,’ economist says.

Orders for “big ticket” durable goods reversed direction in April after two months of increases and fell 4.1%, the government said today.

“It kind of coincides with the industrial production report we saw earlier,” which showed a 0.4% decline in April, said economist Thomas Runiewicz of the WEFA Group in Bala Cynwyd, Pa. “It shows the manufacturing side is still sluggish and planners are still insecure about the future.”

The Commerce Department said durable goods orders to U.S. factories totaled a seasonally adjusted $123.3 billion for the month. The decline erased nearly half of the 8.9% gain during the previous two months after a record 10.5% drop in January.

But excluding the transportation sector, orders for durable goods--items expected to last at least three years--were off just 0.1% in April.

“The volatility in orders the last four months is attributable to the transportation equipment industry,” the department said. “Excluding transportation, orders have been relatively flat.”

Declines in both aircraft and automobile orders in April caused a 14.3% drop in the transportation sector to $31.6 billion. The drop followed gains of 23.4% in March and 10.1% in February. Transportation orders had plunged 29.4% in January.

Both Runiewicz and Kris Bledowski, an economist with Cahners Economics in Newton, Mass., said they expect the manufacturing economy to pick up later this year.

“Investment spending will rebound after a year and a half of depressed spending that was caused by lower profits,” Bledowski said. “And I would see a tremendous pull from Europe that is going to grow this year much, much more robustly than the United States . . . that would stimulate demand for U.S. exports.”

Runiewicz also said he expects consumer spending in the United States to pick up in the second half.

Non-defense capital goods orders, often a barometer of business investment plans, were down 9.7% to $36.9 billion after rising 13.3% in March.

Shipments of durable goods fell 2.3% to $122.1 billion, but unfilled orders inched up 0.2% to $497.8 billion.

“The one positive note is that unfilled orders are still on the plus side,” Runiewicz said. “It means there’s still a backlog there.”

A backlog of orders means that there is less chance of production cutbacks and loss of jobs.

The electrical machinery sector posted the only gain, up 4.5% to $20.4 billion. Most of the increase represented defense communications equipment. The sector had slipped 2.1% the previous month after a 2.8% advance in February.

Non-electrical machinery orders fell 2.5% to $21.8 billion after being unchanged in March. They had edged down 0.6% the previous month.

Orders for primary metals also dropped, down 1.5% to $11.6 billion after rising 7.9% in March and falling 4.2% in February.

Excluding defense, durable goods orders decreased 4.5%.

Defense orders were up 2.3% to $7.9 billion on top of gains of 0.6% and 18.3% in March and February.