Factory Orders Continue Ebb and Flow With 1.5% Drop in June

Orders to factories for manufactured goods fell 1.5% in June, continuing their roller-coaster ride through the first half of 1990, the government reported today.

The Commerce Department said orders for both durable and non-durable goods totaled a seasonally adjusted $237.4 billion after a 2.2% gain in May.

The choppy performance began in January with a 5.5% decline--the sharpest drop since a 7% decrease in December, 1974. Orders also fell 2.1% in April and rose 4% in March and 1.8% in February.

Factory orders are a key economic barometer of manufacturing industry plans for production. A decrease in orders may forecast a slump in that sector and layoffs in the future.

The June decline was led by a 2.8% drop in orders for durable goods--items expected to last more than three years--to $125.1 billion. But the decline was not as sharp as the 3.2% drop when durable goods orders were first reported last week.

Non-durable goods orders were unchanged at $112.3 billion.

Over half of the durables decline was in defense goods, which dropped 20.3% to $8 billion. Excluding defense, orders would have dropped 0.7%.

In the key category of non-defense capital goods, a barometer of business investment plans, orders advanced 0.6% to $36.1 billion after falling 1.8% a month earlier.

Both of the durable categories posted losses.

Transportation orders were down 4.9% to $33.8 billion after rising 10.2% in May. Excluding transportation, orders were off 1.0%.

Other durable declines included electrical machinery, down 3.7% to $20.0 billion following a 1.4% gain the previous month; primary metals, down 3% to $11.5 billion after a 2.5% advance in May, and non-electrical machinery, off 2.5% to $21.7 billion after increasing 3.6%.

Shipments of factory goods in June increased 0.5% to $240.1 billion on top of a 2.0% gain in May.