Durable-goods orders plunge
ORDERS to United States factories for big-ticket durable goods, which includes everything from refrigerators to tanks, plunged 4.2 percent in July, the biggest decline in 2 1/2 years, the government reported yesterday.
The drop - the first since a 1.8 percent fall in February - took analysts by surprise, as many had forecast a gain of some 0.3 percent following June and May jumps of 1.2 percent and 1.4 percent respectively. But the decline did support the expectation of many economists that the recovery will slow in the second half of this year in response to five interest-rate hikes since February.
Analysts noted that, even with the July setback, the largest drop since a 5.4 percent plunge in December 1991, durable-goods orders were still up 13.3 percent from last year's level.
The Commerce Department blamed most of the drop on a two-week shutdown of auto-assembly plants to retool for the new model year.
For July, durable-goods orders totaled $144.87 billion, a drop of $6.38 billion from June. The biggest decline was a 15.8 percent drop in transportation orders, which fell to $31.91 billion. Demand for aircraft was also down, the government said. Nondefense capital goods fell by 5.3 percent. Orders for primary metals such as steel were down 0.8 percent, while orders for industrial machinery were off 1.5 percent. Defense orders fell 16.4 percent. Excluding the military sector, commercial-goods orders were down 3.6 percent. The only major category to show an increase was electronic equipment, with a gain of 0.8 percent.