Factory Orders Soared 10% in ‘94, Biggest Rise Since 1980 : Economy: A 1.7% surge in December contributed to the Fed’s latest decision to boost interest rates.

Manufacturing in the United States turned in a stellar performance in 1994, as factory orders rose more rapidly than they have in 15 years.

The Commerce Department said Friday that orders rose 1.7% in December and jumped 10.2% for all of 1994. The yearly advance was the biggest since they soared 12.1% in 1979. Orders rose 5.8% in 1993.

“It confirms other information suggesting the manufacturing sector has good momentum,” said economist Carl Palash of MCM Moneywatch in New York City, a forecasting firm. “It’s basically a strong report. But I expect a slowdown.”

The December gain was led by a sharp rise in demand for ships and tanks that contributed to a 6% gain in transportation orders. Excluding the volatile transportation component, orders still rose 1% in December compared to a 1.4% increase the previous month.

All orders rose 2.7% in November--revised upward from an earlier report of 2.6%. Orders advanced nine times last year, and for 14 of the last 17 months.

New orders are a key gauge of manufacturing, which made a strong contribution to the economy’s overall 4% expansion last year.

The surge at the end of 1994 contributed to the Federal Reserve’s decision Wednesday to boost interest rates for the seventh time in a year to slow the pace of growth and check inflation.

Orders for both durable and non-durable goods totaled a seasonally adjusted $298.6 billion in December, up from $293.7 billion the previous month.

Shipments, a measure of current production, increased 1.4% to $295.3 billion in December, the third gain in the last five months. Shipments rose 2.5% in November and were 8.5% above 1993.

The backlog of unfilled orders rose 0.7% in December, the fourth straight advance, to $456.6 billion after gaining 0.6% the previous month. The December total was 3.3% higher than a year earlier.

The orders backlog is often seen as a measure of whether current facilities and manpower are able to keep up with demand.

Inventories in December rose 0.3% to $391.3 billion, after a 0.5% decrease in November. The inventory level at year’s end was 3.7% higher in than December, 1993.

Orders for durable goods, or items expected to last more than three years, were up 1.5% to $161.7 billion, after jumping 3.4% in November.

Orders for non-durable goods were up 1.8% from November at $136.8 billion.

Orders for non-defense capital goods excluding aircraft fell 0.9% in December after dropping 1% the previous month. Analysts consider declines in this category as signals to manufacturers that there is no need to expand.