Rise Seen In Durable Goods Orders

Demand for durable goods rose an unexpected 0.9 percent in September to $192.1 billion behind big jumps in orders from the Pentagon and from business investment, the Commerce Department said Wednesday. Excluding defense, orders fell 0.2 percent.

The department also revised August's increase from 1.7 percent to 2 percent, another sign that the manufacturing sector may not be as weak as some believed.

Manufacturing has been hard hit by the global economic crisis that started in Asia; many producers have seen lucrative markets dry up and competition from abroad intensify. In addition, the two-month strike at General Motors disrupted many manufacturing industries temporarily.

Wall Street economists were expecting orders for durable goods to fall about 0.9 percent in September. Durable goods are manufactured items designed to last three years or more. Changes in durable goods orders are sensitive to general business conditions and expectations, interest rates and exchange rates, and are therefore closely watched by economists for signs of economic boom or bust.

The report showed pockets of strength and weakness in durable manufacturing. Transportation orders sank 4.4 percent to $44.7 billion as civilian aircraft orders plunged 45 percent to $5.8 billion. Orders for autos rose by an undetermined amount.

Orders for primary metals, which have been hurt by foreign competition and reduced demand, dropped 2.3 percent to $14.1 billion. Primary metals orders are down 19 percent from September 1997.

Other sectors were healthy. Orders to capital goods industries, which serves as a proxy for business investment, rose 0.3 percent to $60.4 billion and jumped a stunning 6.3 percent to $47.5 billion when stripped of the defense and aircraft orders. The increase could mean businesses are adding to their capacity in a show of confidence.

Orders for electronic and electrical equipment rose 5.4 percent to $32.8 billion after falling by a similar percentage in August. Orders for industrial machinery, the other key component for business investment, rose 4.4 percent to $39.1 billion after dropping 0.5 percent in August.

Shipments of durable goods rose 1.5 percent to $191.7 billion while unfilled orders, which signal future output, rose 0.1 percent to $506.7 billion.

The department will release more detailed information about factory orders, including nondurable goods, on Nov. 4.

Written By Rex Nutting