Durable Goods Orders Slip in January

New orders for costly manufactured goods slowed in January, the government said Thursday, although strong shipments of finished products showed factories were humming with business in the new year.

The Commerce Department said the value of new orders for durable goods such as cars, computers and appliances intended to last three years or more fell 1.3% to a seasonally adjusted $214.8 billion.

But it followed the strongest surge in business in seven years in December, when orders climbed 6.3%, the biggest rise since a 7.3% jump in December 1992. The December 1999 figure was revised upward from 5.5%.

Analysts said the drop in January orders masked the economy’s underlying vigor, which is likely to lead to further interest rate increases.

“The economy is not slowing, and manufacturing should lead the way to solid growth for at least the next six months,” said economist Joel Naroff of Naroff Economic Advisors Inc. in Holland, Pa.

Commerce said orders in January were 6.3% stronger than in January 1999, reflecting the ongoing revival in manufacturing industries.

Separately, the Labor Department said Thursday that new applications for jobless pay dropped last week for the second straight week, further confirmation of a buoyant job market.

First-time claims for state unemployment insurance dropped to 278,000 in the week ended Feb. 19 from a revised 285,000 in the prior week and well below the average economist forecast of 286,000.

The durable goods report is highly volatile and subject to substantial revisions.

The January data showed wide variations from category to category as orders for electrical equipment plummeted but industrial equipment orders, which include computers, posted the strongest rise in nearly 15 years.

Analysts said the report confirmed that a rebound in manufacturing that began last year after weakness in 1998, when much of Asia was in financial crisis, was intact as 2000 began.

Orders for transportation equipment fell 3.6% to $53.32 billion in January after a 23.2% jump in December.

Excluding transportation, which accounts for about a quarter of total durable goods, new orders in January were down 0.5% following a 1.5% rise in December.

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Durable Goods

New orders, in billions of dollars, seasonally adjusted:

*

January:

$214.8 billion

*

Source: Commerce Department