Durables Report Sends Ominous Signal

Factory orders for big-ticket durable goods fell a sharp 1.7% in September, the Commerce Department reported Wednesday. Analysts said the report foretells a further production and employment slump in the industrial sector, which has lost 500,000 jobs since January, 1989.

“Earlier indications of a September economic rebound are shot down by the month’s durable goods orders,” said William MacReynolds, an economist with the Chamber of Commerce. “The recent decline (in orders) shows that the slowdown will continue, leading to a recession in the current quarter.”

The main reason for last month’s decline in orders was weaker demand for cars, as the 1990 model year ended and manufacturers boosted prices on 1991 cars, together with a drop in orders for military goods.

“It was another report indicating the economy is slowing down, probably . . . that we’re in a recession--but probably indicating the recession will be mild,” said Elliott Platt, director of economic research at Donaldson, Lufkin & Jenrette, a New York securities dealer.

Commerce said orders for durable goods--items expected to last more than three years--totaled a seasonally adjusted $124.9 billion last month.

Transportation orders slid 6.8% to $32.8 billion, with declines in motor vehicles more than offsetting an increase in aircraft.

“The main message is that dealers are not ordering 1991 model cars,” said economist Cynthia Latta of DRI McGraw-Hill in Lexington, Mass.

Durable goods orders have fallen three times in the past four months and, Commerce said, the August decline was even steeper than previously reported: down 0.8% rather than 0.5%. For the year so far, it said, orders were off 0.5% compared to the first nine months of, 1989.