Machine tool orders rise
Foreign demand boosted orders for U.S.-made machine tools last month, despite a soft outlook for the domestic manufacturing industry, according to a report released yesterday.
October orders rose 1.9 percent from September to $269.3 million, an increase of 31.4 percent from October 1989, said the Association for Manufacturing Technology.
"The rise in orders indicates that despite gloomy prospects elsewhere in the economy the level of business activity in the manufacturing technology industries remains firm," said association President Albert Moore.
"In spite of caution on the consumer side of the economy, U.S. manufacturers need to look to the future," Moore said.
But shipments of machine tools fell 14.9 percent in October from the previous month to $254.35 million. This was up 1.1 percent from October 1989.
In its monthly report, the McLean, Va.-based trade group said foreign orders in October shot up 22.7 percent to $34 million and were up 52.8 percent from a year ago.
Deadline nears on luxury tax
Retailers are urging affluent consumers to buy expensive cars, boats, jewelry and furs before the new federal "luxury tax" takes effect Jan. 1. And many consumers appear to be accepting the advice, with some retailers of luxury goods reporting a surge in sales.
Numerous car dealers and boat brokers are publicizing the tax in an effort to stimulate business in the remaining five weeks of the year. So are the Neiman Marcus Co. department stores. And jewelers like Cartier Inc. and Van Cleef & Arpels Inc. say they expect a brief upturn in business.
The deficit-reduction bill signed by President Bush on Nov. 5 established the 10 percent excise tax. It applies to the portion of retail prices that exceeds certain thresholds: $30,000 for automobiles, $100,000 for private boats and yachts, $10,000 for furs and jewelry, including watches, and $250,000 for private airplanes.
The Congressional Joint Committee on Taxation estimated that the luxury tax would raise $25 million next year and $1.5 billion over five years.
Economy should rebound
White House chief economic adviser Michael Boskin said yesterday the U.S. economy probably will rebound from its current slowdown by the middle of next year once oil prices decline.
But a drop in oil prices depends on resolving the Persian Gulf crisis, Boskin said on Cable News Network's Newsmaker program.
"When oil prices decline from where they are now and for other reasons, we will come out of it sometime in the middle of next year," Boskin said in the interview.
Oil prices have doubled since Iraq's Aug. 2 invasion of Kuwait and remain high and volatile as the standoff with Western troops in Saudi Arabia continues.
The energy shock drove up the U.S. inflation rate to 6.7 percent so far this year, its fastest pace in six years.
Price climbs and fear of war are undermining consumer confidence, now at an eight-year low -- dangerous for an economy that relies on consumer buying for about two-thirds of its activity.
Holiday shoppers cautious: The Christmas season began auspiciously for some retailers but poorly for others as consumers, holding tight to their purse strings, shopped cautiously over the Thanksgiving weekend.
The big retailers -- even those reporting good business the first three days of the season -- still face a rocky road to Christmas amid the uncertain outlook for consumer spending.
Dayton Hudson Corp. was among the retailers pleased by its results. But the nation's largest retailer, Sears, Roebuck and Co., had a disappointing weekend. Matthew Howard, Sears' senior vice president for marketing, said yesterday that sales were "somewhat below our expectations."
The weakening economy and the Middle East crisis have forced many consumers to cut back on their spending this Christmas. Shoppers interviewed around the country at the start of the weekend said they don't have as much money available for gifts this year.
MCA's sale imminent
MCA's sale imminent: MCA Inc.'s directors appeared poised to approve their company's sale to Matsushita Electric Industrial Co., but were still meeting to consider the transaction last night.
One person close to the companies said a deal appeared "imminent." But an announcement of any sale remained unlikely before today at the earliest, since the companies have not concluded formal negotiations, and because any agreement still would have to go before Matsushita's board in Osaka, Japan.
MCA's 11-member board met all day in New York to consider the buyout and was scheduled to resume meetings last night after a dinner break.
Several people close to the talks said the companies did not have a tentative agreement on which MCA's board could take firm action. It appeared more likely that directors of the Hollywood company were conducting a thorough review of progress in the bargaining, which for the last week has been conducted in New York between top officers of the two companies.