Factory Orders Up

Orders received by U.S. factories rose for a fourth straight month in April, aided by more demand for transportation and defense goods, the Commerce Department said. The 1% gain in April orders to a seasonally adjusted $243.9 billion followed a revised 1.9% increase in March orders and was in line with Wall Street economists’ expectations of a 0.9% rise.

* Key Factors: Most of the gain came from improved orders for durable goods--long-lasting items such as new cars and refrigerators, which require significant labor to produce. Orders for transportation equipment climbed 5.9% in April after a 7% increase in March. Shipments of vehicles and parts gained 1.6% in April after rising 1.7% in March. In the auto industry, shipments correspond to orders. Excluding transportation, factory orders were up 0.3% in April after increasing in March by 1.1%. Shipments of manufactured goods, which reflect more immediate demand than orders, increased by 0.2%.

* Good Signs: The fresh evidence of stronger factory activity bolsters signs of a revival in manufacturing that should help keep a moderate recovery going. In addition, the decline in inventories brought supplies of unsold goods to their lowest point in three years.

* Bad Signs: Economists said the figures support the view that a weaker-than-normal recovery is in place that will push gross domestic product about 2.5% to 3% higher in 1992. That is about half the pace of growth normally seen in the first year after a recession and is unlikely to pull the unemployment rate much below 7%.

Factory Orders

Total new orders in billions of dollars, seasonally adjusted

April, ‘92: 243.9

March, ‘92: 241.4

April, ‘91: 231.2

Source: Commerce Department