Durable-goods orders rose 4.4% in Dec.

January 30, 1991|By New York Times News Service

WASHINGTON -- Buoyed in part by new military orders related to the Persian Gulf buildup, orders to factories for long-lasting goods climbed 4.4 percent in December, the Commerce Department reported yesterday.

The increase was somewhat more than expected, but analysts said they found little in the latest figures to support hopes of an economic rebound.

Even the rise in military orders, they noted, was from a severely depressed level the month before and was not large enough to provide any more than a nudge to business activity in coming months.

"It's only a marginal recovery," commented Robert H. Chandross, chief economist for Lloyds Bank North America. He added that the best that could be said of yesterday's report on durable goods, which are those that last at least three years, is that "in the aggregate, the economy is not in free fall."

A Commerce Department official said last month's orders for durables were clearly higher than they would have been in the absence of the Persian Gulf confrontation, but that he could provide no breakdown, for example, of orders for ships compared with those for tanks.

Excluding military orders and those for commercial aircraft -- segments of the economy not closely linked to the business cycle -- December durables orders fell 3.4 percent from November levels.

Excluding only military goods, orders rose 1.9 percent, to $113.3 billion, after tumbling 9.1 percent without military goods in November, the department reported.

December's 4.4 percent overall rise from the month before, to $121.6 billion in orders, followed a 10.1 percent plunge in November from October, only slightly better than the 10.5 percent plunge initially reported for that month.

November's order total was so poor because of the later-than-usual adoption of the federal budget, which delayed military and other government purchases.

Orders for military capital goods in November were the lowest in more than eight years, at $5.3 billion, and they rose last month to only $8.3 billion, or about 10 percent more than the monthly average for 1990 and below the average for 1989.

For all of 1990, durable-goods orders sank 1.6 percent, the first decline since a 6.4 percent drop in the recession year of 1982, according to department officials.

Orders for durables are closely watched because they signal future economic activity. But analysts are careful to allow for wild gyrations caused, in part, because durable goods tend to be costly items, such as airplanes, that are ordered sporadically and in large quantities.

Analysts also take into consideration that some of the biggest items ordered might not actually be built for years, although the economy gets some immediate stimulus from design and other preliminary work.

Yesterday's report also showed that shipments of durable goods in December fell 2.8 percent, to $118.1 billion, hurt by a decline in shippings of motor vehicles and parts.

Backlogs of unfilled orders edged up 0.7 percent, to $501.6 billion, an increase that was almost entirely linked to construction of aircraft and ships, the department said.

The 13.6 percent increase, to $32 billion, in orders for transportation equipment was helped by increases in military shipbuilding and commercial aircraft and parts, which more than offset a decline in motor vehicles and parts.

Orders for electrical machinery rose 11.5 percent, to $20.6 billion, mostly reflecting communications equipment.

However, new orders for non-electrical machinery slumped 5.1 percent, to $21 billion, and orders for primary metals slumped 6.1 percent, to $10.1 billion.

Before adjustment for seasonal variation, durable-goods orders last month were $123.7 billion, up from $115.6 billion in November but 7.3 percent below the level of December 1989.

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