Positive Sign for the Economy

T he Commerce Department reported that orders for durable goods--items expected to last three years or longer--jumped 2.3% in June to a seasonally adjusted $122.5 billion. It was the highest level since orders reached $122.6 billion in August, 1991.

* Good News: The 2.3% gain more than made up for the first decline in three months in May, when orders fell 2.2%, the steepest decline since last December. All major categories posted gains. Analysts had expected an increase of about 1%. In addition, orders should increase over the July and August periods, as car and truck output is stepped up aggressively for the new model year.

* Bad News: The backlog of unfilled orders fell 0.7% to the lowest level since March, 1989. It was the 10th consecutive decline and suggested that factories’ existing workforces were having little trouble keeping up with new orders, keeping a damper on the employment picture.

* Key Factors: Orders for non-defense capital goods excluding aircraft were up 3.6% after a 1.4% gain a month earlier. These orders often are a gauge of manufacturing plans to expand and modernize. Orders for industrial machinery and equipment rose 4.5% after a 0.6% decline in May. Orders for primary metals were up 2.8% following a 0.5% gain. Electronic and other electrical equipment orders increased 2.4%, more than erasing a 0.6% loss a month earlier. The often-volatile orders for military equipment jumped 17.6% after plunging 27.6% the previous month. Excluding this category, orders rose 1.6%.

Durable Goods

New orders in billions of dollars, seasonally adjusted

June, ‘92: 122.5

May, ‘92: 119.8

June, ‘91: 113.5

Source: Commerce Department