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Thursday, Jul. 30, 1998
Asian woes, GM strike reduce big-ticket orders
Industrial sector expected to remain sluggish, analyst says
By DAVE SKIDMORE
Associated PressWASHINGTON -- Spillover from the Asian economic crunch and the just-settled General Motors strike pushed down new orders to factories for big-ticket goods in June for a second consecutive month.
The 0.2 percent decrease, coming on top of a steep 3.3 percent slide in May, reduced orders for durable goods -- items expected to last three or more years -- to a seasonally adjusted $182.3 billion last month, the Commerce Department said Wednesday.
``The trend has turned from an accelerating boom in 1997 into a much tougher climate here in 1998,'' said economist David Orr of First Union Corp. in Charlotte, N.C.
It was the first back-to-back decline in the crucial sector in more than a year, but some economists saw a partial rebound in orders for some high-tech goods as a sign of hope.
Excluding aircraft, orders rose 3.4 percent for capital goods, or machinery and equipment that businesses use.
``Overall, manufacturing is still the weak link in the U.S. economy,'' said economist Lynn Reaser of NationsBank Corp. of Jacksonville, Fla. ``But the ending of the GM strike will help the sector to improve, and if Asia starts to bottom out, the manufacturing sector could start to improve.''
U.S. manufacturers have seen their Asian sales plummet and, at home, have been forced to compete against Asian goods produced more cheaply because of steep declines in currencies such as the Japanese yen and Korean won.
And manufacturing's weakness finally is showing up in numbers measuring U.S. economic strength in the aggregate. Growth in the gross domestic product in the April-June quarter is expected to be flat, or perhaps negative, when it is reported Friday. That's after the economy was reported to have grown at a 5.4 percent pace in the January-March quarter.
Growth in the quarter started this month should rebound only modestly, economists believe. The declines in durable goods orders signal manufacturing output may continue falling.
``Automotive orders will decline again in July but jump in August as GM gets back to work,'' said economist Bruce Steinberg of Merrill Lynch. ``Aside from that, however, we expect the industrial sector to remain sluggish.''
June's order decrease was focused in automobiles, aircraft and primary metals. Transportation orders fell 6.9 percent, the fourth decline in five months, and primary metals declined 2.5 percent, the third drop in four months.
However, orders for electronic and electric equipment rose 1.9 percent, partially recovering from a sharp 9 percent drop in May. Orders for industrial machinery rose 1.7 percent in June after a similar drop in May.
Shipments of durable goods, a measure of current production, were unchanged in June. The backlog of unfilled orders fell 0.7 percent. It's decreased in four of the past five months.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web