December Orders for Durable Goods Fall Amid Asia Woes

Last year was good for American manufacturers, but a plunge in orders for aircraft in December may be an ominous sign of fallout from the Asian financial crisis.

“These numbers are for the first time starting to show the direct effects of the Asian turmoil,” said economist David Jones of Aubrey G. Lanston & Co. in New York. “As we move into 1998, we are likely to see more effects from this crisis.”

Orders for durable goods fell 6.1% overall to a seasonally adjusted $183.6 billion in December, according to figures released by the Commerce Department on Wednesday, representing the worst decline in six years. A 74% plunge in aircraft orders and a decline in demand for metals accounted for the decrease.

“Orders for new airplanes are losing altitude primarily because of the recession in Asia,” said Jerry Jasinowski of the National Assn. of Manufacturers. “A series of export orders have been canceled or delayed.”

Boeing Co. announced a $498-million fourth-quarter loss this week and predicted that Asian customers will purchase 60 fewer planes over the next three years than previously expected.

For the year, though, orders rose 7.1% for durable goods--big-ticket items expected to last at least three years. That’s an improvement over the 5.3% gain of 1996 but doesn’t match the 8% advance of 1995. President Clinton pointed out in his State of the Union address that record exports in 1997 accounted for one-third of the nation’s economic growth.

“I want to keep them going, because that’s the way to keep America growing,” he said. But that will be tough in the short run because the devaluation of Asian currencies has slashed the appetite for U.S. goods in a region that accounts for 30% of U.S. exports.

That almost certainly will dampen the economy’s robust growth. On the bright side, it also is likely to restrain inflation, analysts said.