Factory orders rise unexpectedly to a record level

September 05, 1997|By BLOOMBERG NEWS

WASHINGTON -- Orders placed with U.S. factories increased unexpectedly in July to a record level, a sign that manufacturing could be poised for faster growth, the Commerce Department said yesterday.

The 0.2 percent increase in July factory orders to a seasonally adjusted $330.282 billion followed a revised 1.7 percent gain in June to $329.554 billion. Previously, the government estimated that June orders rose 1.2 percent to $327.9 billion. Before yesterday's report, analysts had expected a 0.1 percent decline in July factory orders.

Stronger demand for motor vehicles and parts, metals, food, textiles and plastics led July's gain. Orders for aircraft, electronics and communications gear declined. Manufacturing

"will continue to be on the positive side of the ledger" for the rest of the year, said Kevin Flanagan, an economist at Dean Witter Securities in New York.

Also yesterday, Labor Department figures showed that the number of workers filing for unemployment benefits rose by 2,000 to a seasonally adjusted 326,000 in the week ended Aug. 30, in line with expectations.

Claims are "still at comparatively low levels and it's consistent with a strong labor market," said Suzanne Rizzo, an economist at Maria Fiorini Ramirez Inc. in New York.

The factory report showed that inventories increased 0.5 percent in July after rising 0.3 percent in June.

Analysts have warned that a buildup in inventories could lead to slower factory orders as companies attempt to empty their warehouses and stores of merchandise.

However, the inventory-to-shipments ratio, which tracks the amount of time that products sit in storage, declined to a record low 1.34 in July from 1.35 in June, according to Commerce Department records.

"It may be that the combination of low inventory-sales ratios and a high level of confidence" point to further inventory building, said Elliott Platt, an economist at Donaldson, Lufkin & Jenrette in New York.

Pub Date: 9/05/97

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