Mixed Reports in June Indicate Shaky Recovery : Economy: Factory orders rose 2.3%, but personal income was flat and consumer spending edged up only 0.5%.
Factory orders climbed in June, boosted by demand for big-ticket items, but personal income was flat, forcing consumers to dig into their savings to produce a modest spending rise, the government said Friday.
Economists said the reports back the view that the recovery continues to lurch along and that consumers are unlikely to give the economy a big shot in the arm.
The 2.3% rise in orders received by the nation’s factories in June was the biggest in nearly a year and brought orders to a seasonally adjusted $244.21 billion, the Commerce Department said.
It was the fifth increase in six months and reflected greater demand for aircraft, industrial machinery, metals and a broad array of other products. The rise followed a drop of 0.9% in May and a 1.3% rise in April.
But income from wages, salaries and other sources like rent and interest was unchanged in June at a seasonally adjusted annual rate of $5 trillion after rising 0.3% in May and 0.1% in April.
The figure reflected a weak labor market, lower interest income from savings deposits and lower farm income, said economists.
Meanwhile, spending rose 0.5% in June to a seasonally adjusted annual rate of $4.1 trillion, after rising 0.3% in May and 0.2% in April. Consumer spending accounts for about two-thirds of economic activity.
“The numbers are consistent with a weak and uneven recovery. We’re growing, but it’s barely more than a crawl,” said David Jones, Aubrey G. Lanston & Co.’s chief economist.
The reports add to the conflicting signals now emerging.
The government said Thursday the number of people applying for jobless benefits fell in the latest week to the lowest level in 1 1/2 years. Sales of new homes jumped in June, helped by the lowest mortgage rates in decades.
Yet tight-fisted consumers and sluggish overseas economies combined to slow U.S. economic growth to an annual rate of just 1.4% in the second quarter, contrasted with 2.9% in the first quarter.
“It looks like we have enough positive factors in place for a recovery, but the person on Main Street may not feel much better--particularly since a weak recovery doesn’t do much for the jobs market,” said Jones.
The factory orders data showed pockets of strength scattered around the economy that should help growth in the next few months.
Personal Income
Trillions of dollars, seasonally adjusted annual rate:
June, ‘92: 5.02
May, ‘92: 5.03
June, ‘91: 4.83
Personal Spending
Trillions of dollars, seasonally adjusted annual rate:
June, ‘92: 4.07
May, ‘92: 4.05
June, ‘91: 3.89
Factory Orders
Total new orders in billions of dollars, seasonally adjusted:
June, ‘92: 244.2
May, ‘92: 238.7
June, ‘91: 229.2
