Factory Orders Limp to Slight Gain in July

Orders for goods made by U.S. factories rose 1.6% to $240.35 billion in July because of more demand for aircraft, the Commerce Department said Thursday in a report that added to the impression of a staggering industrial sector.

Shipments of finished goods dropped from June, stocks of unsold goods rose and the department noted that orders for manufactured goods have remained flat for the past 2 1/2 years at an average of $236 billion a month.

“It confirms that, before the situation in the Middle East, things were sluggish but growing,” said economist Thomas Runiewicz of the WEFA Group in Bala-Cynwyd, Pa.

“Now, with the Middle East problem and energy prices higher . . . I would expect to see factory orders down in August and especially this fall,” he added.

David Jones, senior economist with Aubrey G. Lanston & Co. in New York, said orders likely will fall off in the second half because the shock of higher oil prices since the Aug. 2 Iraqi invasion of Kuwait has sapped consumers’ confidence.

“These orders show the same pattern of an economy barely growing, perhaps on the brink of a recession and possibly about to be pushed over the edge by a sharp drop in consumer confidence,” Jones said.

The Conference Board, a business research group in New York, said this week that the Middle East crisis has shaken consumers’ willingness to purchase goods. Their confidence level is the lowest since the last recession in 1981-82.

The factory orders gain last month was slightly better than the 1.3% forecast by economists and followed a revised 1.9% drop in June orders.

The gain was due mainly to a pickup in commercial aircraft orders, which surged 25.3% in July after declining 13.2% in June. Boeing Co. now has a backlog of orders from overseas for new commercial aircraft that should last for years.