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Friday, Aug. 7, 1998
Factory orders hit plateau
Drop in exports to Asia cited as factor in reports
By DAVE SKIDMORE
Associated PressWASHINGTON - Demand for American manufactured goods stagnated in June, hurt by slumping orders for aircraft and autos.
The tiny 0.1 percent gain in overall orders failed to make up for a 2.2 percent drop in May, the sharpest in three years.
Still, the number of unemployment benefit applications filed last week remained low, suggesting jobs continue to be plentiful.
Factory orders totaled a seasonally adjusted $330.5 billion in June, up from $330.2 billion, the Commerce Department said Thursday. According to the Labor Department, first-time claims for unemployment benefits rose only slightly to 307,000 last week from a 15-week low of 301,000 the previous week.
Analysts said the factory orders data for individual industries illustrated the strong crosswinds buffeting the economy: Spillover weakness from Asia's economic troubles and continuing robust consumer demand.
``Asia is definitely hitting some sectors. It's a little hard to tell if we've seen the worst of that,'' said economist Priscilla Trumbull of the WEFA Group in Eddystone, Pa.
``But the consumer-related sectors are doing a lot better than many people thought they would. There is tremendous momentum in a lot of these industries,'' she said.
Meanwhile, export sales to Asia have plummeted. And U.S. manufacturers have faced increased competition from Asian imports, priced cheaply because of currency devaluations over the past year.
And, because an Asia-related drop in commodity prices is hurting U.S. farmers, manufacturers of fertilizer and farm machinery are starting to feel the pain too.
The nation's unemployment rate, at 4.5 percent in June, remained near a 28-year low. That's given U.S. consumers a keen appetite for new homes and cars, though car orders were temporarily depressed in June by the now-settled General Motors strike. The strike also helped elevate unemployment claims to 394,000 for two consecutive weeks in late June and early July.
Outside of transportation, the manufacturing picture was less gloomy than suggested by the overall number. Orders increased 1.1 percent in June following a 1.8 percent decrease the month before.
Orders for computer and office equipment jumped 7 percent. They increased 1.6 percent for industrial machinery, 3.5 percent for stone, clay and glass products and 6.5 percent for navigation, medical and other instruments. They also rose for food and chemical products.
But orders plummeted 21.6 percent for aircraft, on top of a 16.1 percent drop the month before, and 6.9 percent for automotive equipment.
Shipments - a measure of current production - increased 0.3 percent in June. That pushed down the backlog of unfilled orders by 0.8 percent, the fourth decrease in five months.
``Shipments cannot outpace orders forever and should soon start to slow,'' said economist Gerald D. Cohen of Merrill Lynch.
Inventories of unsold goods edged 0.2 percent higher.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