Factory Orders Rebound
W A S H I N G T O N, Oct. 4 -- Orders to American factories rose by asurprising 2 percent in August, after posting a record drop themonth before. A big jump in demand for airplanes and othertransportation equipment led the way.
The Commerce Department reported today that total factoryorders grew to a seasonally adjusted $382.5 billion in August, upfrom $375 billion the month before. It marked the third increase inthe last four months.
Figure Surprises AnalystsAugust’s performance was stronger than many analysts wereexpecting. They had predicted factory orders would actually fall by1.9 percent.
In July, factory orders fell by a record 8.1 percent, accordingto revised figures. That was even weaker than the 7.5 percentplunge the government estimated one month ago.
The Federal Reserve has boosted interest rates six times sinceJune 1999 to slow the economy and keep a lid on inflation. OnTuesday, the Fed decided not to raise rates for a seventh time thisyear, but it still held open the door to further rate increases inthe future should inflation flare up.
Orders for transportation equipment, which posted the biggestincrease, grew by 6.6 percent in August, mostly due to strongerdemand for airplanes and aircraft parts, the government said. InJuly, transportation orders fell by a record 32.6 percent, an evensharper decline than the government previously thought.
Breaking Down the DataExcluding the volatile transportation category, factory ordersrose 1.3 percent in August, the fifth increase in the last eightmonths. The transportation sector swings widely from month to monthbecause it includes costly items such as airplanes, ships andmilitary equipment including tanks.
Orders for electronic and electrical equipment, includinghousehold appliances and communications equipment, went up by 2.7percent in August, mostly due to higher demand for electroniccomponents. The month before, such orders fell by a sharp 18.9percent.
Durable goods, big-ticket manufactured items expected to last atleast there years, saw orders rise by 2.9 percent, following a 13.2percent decline. For nondurables, such as fuel, orders rose 0.9percent after a 0.7 percent drop in July. Chemicals had the largestincrease.
