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Factory Orders Inch Up In June

Factory orders rose 0.1 percent in June, even as the Asian crisis and the General Motors strike put a drag on the U.S. economy, the Commerce Department said Thursday.

It was the third increase in four months, and was well-received on Wall Street, where major stock indexes reversed earlier losses. The Dow Jones Industrial Average rose 4 to 8550 in recent trading after trading as low as 8486 before the report.

Excluding the volatile transportation sector, orders jumped 1.1 percent, the biggest rise since last August and reversing a decline of 1.8 percent the previous month.

Aircraft orders fell 21.6 percent, while orders for autos sank by about $2 billion, reflecting negative effects of the recently ended two-month strike against GM. Overall, orders for transportation equipment dropped $3 billion, or 7.2 percent, to $39.4 billion. It was the fourth decline in five months.

Excluding the volatile defense sector, June orders came in flat.

Shipments rose 0.3 percent, the first increase since March. Unfilled orders, an indicator of future demand, fell 0.8 percent, the fourth drop in five months. Inventories increased 0.2 percent.

Taken together, the report indicates the U.S. economy remains on a strong track despite continued economic weakness in Asia. The bond market was expected to shrug off the report, since most of the information had been released last week in the durable-goods orders report.

Machine orders rebounded from a 1.7 percent drop in May to surge 1.6 percent in June. Computer orders also came back strong, jumping 7.0 percent from a 2.5 decline the month before. Nondurable goods, such as paper and chemicals, rose 0.3 percent from a decline of 0.8 percent in May.

Written By Jeffry Bartash

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