Durable goods orders zoomed in August as demand for 1995 model cars and trucks helped propel orders for big-ticket items to their biggest advance in nearly two years.
The Commerce Department said Wednesday that orders to U.S. factories for long-lasting goods, everything from tanks to washing machines, soared 6% in August and more than wiped out a 4% decline in July.
Durable goods orders totaled a seasonally adjusted $154 billion in August, up from $145.2 billion in July, the department said.
While analysts marveled at the continued strength of the economy's manufacturing sector, financial markets appeared to welcome the news. Some analysts said the glow on Wall Street was due more to the Federal Reserve Board's decision Tuesday not to boost interest rates for the sixth time this year.
Much of the gain in demand for durable goods came from sharp increases in volatile orders for cars and aircraft. Still, the advance was broad-based and covered all major categories--electronic and other electrical equipment, primary metals and industrial machinery.
"I don't know if remarkable is the word, but we're having one hell of a year," said Michael Evans, head of an economic forecasting firm in Boca Raton, Fla. "If we were looking for any sign of a slowdown, we didn't see it in this report. We'll have to wait for 1995 for a slowdown."
Economist Bruce Steinberg of Merrill Lynch & Co. insisted that there are no signs of overheating.
"The industrial sector is healthy, but not accelerating as the August durables report might suggest," he said. Excluding cars and aircraft, he said, the pace of demand is sustainable without an inflationary burst.
Analysts said they are sticking to predictions that the Fed will wait until after the November elections to boost interest rates again--unless a sharp drop in unemployment is announced Oct. 7 or fresh signs of inflation crop up.
Analysts had expected durable goods orders to rebound, but the size of the increase was startling. The August advance was the largest since orders skyrocketed 9.1% in December, 1992.
New Orders, in billions of dollars, seasonally adjusted
July, '92: 119.0
June, '92: 123.2
July, '91: 127.2
Source: Commerce Department