Durable-Goods Report Points to Slowed Growth

Led by a surge in military spending for aircraft, orders to U.S. factories for long-lasting, high-cost goods rose 1.4% in March, the first advance in three months, the Commerce Department said Wednesday.

But when the aircraft and military components were stripped out, orders for durable goods declined, reflecting a soft economy.

“These numbers point to only slow industrial activity,” said Jerry Jasinowski, an economist and president of the National Assn. of Manufacturers. “The sluggish pace of orders clearly indicates that the economy is not as strong as some analysts had thought.”

In a separate report, a majority of business economists surveyed in late March and earlier this month also predicted sluggish economic growth over the next six months.

The National Assn. of Business Economists said 61.8% of the 110 survey participants expected subpar growth.

The association said 34.5% predicted average growth and just 2.7% expected strong growth. But the survey found that only 0.9% expected a recession.

Durable-goods orders totaled a seasonally adjusted $167.6 billion, the Commerce Department said, up from $165.3 billion in February.

The advance was the first since a 3.1% jump in December, after which orders fell 0.6% and 2.3% during the next two months.

Although factory orders--both durable and nondurable--grew 10.3% in 1994, bookings slowed to a 6.7% advance last year. Many analysts believe the manufacturing economy will rebound only modestly this year.

“The durable-goods orders report looks like it fits into a re-accelerating growth picture, but it’s impossible to determine how long it will last and how strong it will be,” said economist David Orr of First Union Corp. in Charlotte, N.C.

Transportation orders shot up 9.4% in March, wiping out most of a 12.1% plunge a month earlier. But the advance was entirely in aircraft, which had caused the February decline. Automobile orders fell, due in part to a strike against the General Motors Corp.

Excluding the transportation component, orders dropped 1%.

Military orders, another volatile sector, jumped 73%, due mostly to aircraft. It was the largest increase since an 85.3% surge in December 1991. Military orders had fallen 21.1% in February.

When military orders were removed from the report, orders fell 1.3%.

Also posting declines were tickets for industrial machinery and equipment, down 4.1% after a 4.6% hike a month earlier, and primary metals, down 3.9% after being unchanged in February.

Orders for electronic and other electrical equipment posted the only other gain in the major categories, a 4.8% advance following February’s 1.8% decline.

The report does contain a hint of encouragement: The backlog of unfilled orders rose 1%, the seventh straight monthly increase.

A growing backlog could mean that more jobs and longer production lines will be needed to meet demand, although some analysts partly attributed the most recent increase to the GM strike.

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Durable Goods

New orders, in billions of dollars, seasonally adjusted:

March 1996: $167.6

Source: Commerce Department