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Factory Orders Fell 1.5 Percent in June

August 2, 1990

WASHINGTON (AP) _ Orders to factories for manufactured goods fell 1.5 percent in June, continuing their roller-coaster ride through the first half of 1990, the government reported today.

The Commerce Department said orders for both durable and non-durable goods totaled a seasonally adjusted $237.4 billion after a 2.2 percent gain in May.

The choppy performance began in January with a 5.5 percent decline - the sharpest drop since a 7.0 percent decrease in December 1974. Orders also fell 2.1 percent in April and rose 4.0 percent in March and 1.8 percent in February.

Factory orders are a key economic barometer of manufacturing industry plans for production. A decrease in orders may forecast a slump in that sector and layoffs in the future.

The June decline was led by a 2.8 percent drop in orders for durable goods - items expected to last more than three years - to $125.1 billion. But the decline was not as sharp as the 3.2 percent drop when durable goods orders were first reported last week.

Non-durable goods orders were unchanged at $112.3 billion.

Over half of the durables decline was in defense goods, which dropped 20.3 percent to $8.0 billion. Excluding defense, orders would have dropped 0.7 percent.

In the key category of non-defense capital goods, a barometer of business investment plans, orders advanced 0.6 percent to $36.1 billion after falling 1.8 percent a month earlier.

Each of the durable categories posted losses.

Transportation orders were down 4.9 percent to $33.8 billion after rising 10.2 percent in May. Excluding transportation, orders were off 1.0 percent.

Other durable declines included electrical machinery, down 3.7 percent to $20.0 billion following a 1.4 percent gain the previous month; primary metals, down 3.0 percent to $11.5 billion after a 2.5 percent advance in May, and non- electrical machinery, off 2.5 percent to $21.7 billion after increasing 3.6 percent.

Shipments of factory goods in June increased 0.5 percent to $240.1 billion on top of a 2.0 percent gain in May. But the June increase in shipments resulted in a 0.5 percent drop in unfilled orders to $517.7 billion.

Inventories fell 0.5 percent to $370.5 billion, the third decrease this year altlhough they were unchanged in May.

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