Reports Give Mixed Signals on Economy

Orders to U.S. factories jumped 1.3% in December, led by strong demand for aircraft and automobiles, the Commerce Department reported Thursday.

But analysts cautioned against reading too much into the report, pointing out that it was only the fifth advance in 12 months and that another report shows a big jump in unemployment claims in early February.

“The numbers indicate the economy ended 1995 on a stronger note than many had assumed,” said Lynn Reaser, an economist at First Interstate Bancorp in Los Angeles. “They indicate the economy is not sliding into recession as a few had started to fear.”

Also Thursday, the National Assn. of Manufacturers released the results of a survey of its board. Ninety-two percent of respondents predicted that the economy would escape recession this year. But a consensus of the directors projected that the economy would grow a meager 2.1%, compared with 3.5% in 1994.

Reaser said the Commerce Department report conflicts with other data on the manufacturing economy’s performance in the last three months of 1995.

“The trend of the purchasing management surveys, industrial production and factory employment . . . has shown recent weakness,” she said.

She said another Labor Department report, also released Thursday, shows a sizable increase last week in jobless claims, which suggests that “the economy is still far from strong.”

The Labor Department said the number of first-time claims for jobless benefits shot up by 21,000 last week to a seasonally adjusted 387,000, reversing a two-week decline that came after the January blizzard. The number of new claims had jumped by 96,000--to 412,000--during the week ended Jan. 20, which analysts attributed to filings that had been postponed because heavy snow had caused many unemployment offices to close.

“The rising level of jobless claims points to a stagnant economy,” said Richard Berner of Mellon Bank in Pittsburgh.

December factory orders for both durable and nondurable goods totaled a seasonally adjusted $308.1 billion, up from $304.1 billion in November, when billings slipped 0.1%, the Commerce Department said.

Orders for all of 1995 rose 6.6%, compared with a rise of 10.3% for 1994.

The department said December orders for durable goods--items such as automobiles and appliances that are expected to last more than three years--rose 2.1% after falling 0.8% in November and 1.5% in October. Much of the gain was attributed to a 6.3% advance in transportation orders, led by aircraft and automobiles. Orders for electronic and other electrical equipment rose 6.7%. But orders for industrial machinery and equipment were off 2.2%. Orders for primary metals were down 1.4%.

The backlog of unfilled factory orders rose 0.3%. It was the fourth consecutive monthly rise for that figure, suggesting that greater employment may be needed to meet demand.

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U.S. Factory Orders

Total new orders, in billions of dollars, seasonally adjusted:

Dec. 1995: $308.1

Source: Commerce Department