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Orders For Manufactured Goods Unchanged In May With AM-Economy Bjt

June 30, 1987

WASHINGTON (AP) _ Orders for U.S. manufactured goods were unchanged in May as strength in civilian categories was offset by a slump in demand for military hardware, the government said Tuesday.

The Commerce Department said that factory orders totaled a seasonally adjusted $200.6 billion in May, the same level as in April, when orders had posted a 0.6 percent increase.

The flat performance in May came from a 14.0 percent plunge in the volatile defense category, reflecting a drop in demand for defense communications equipment.

Excluding the weakness in defense, factory orders would have climbed 0.8 percent in May, following a 0.1 percent rise in the civilian category in April.

Michael Penzer, an economist with Bank of America in San Francisco, said that while the increases in manufacturing orders over the past two months have been fairly weak, previous gains were much stronger.

″In the last six to nine months factory orders have definitely picked up and that is tied to the improvement in our exports,″ he said.

American firms are reporting increased sales overseas as the falling dollar has made U.S. goods competitive once again.

The key category of non-defense capital goods, considered a good sign of industry plans to expand and modernize, posted a 5.6 percent increase to $29.9 billion in May following a 3.3 percent rise in April. The strong gains were viewed as a positive sign that business capital spending, which was weak all last year, is starting to recover.

Orders for durable goods, items expected to last three or more years, fell 0.3 percent in May following a 0.7 percent increase in April. A week ago, the government reported that durable goods orders had dropped a smaller 0.1 percent in May.

Orders for non-durable goods rose 0.4 percent in May following an even stronger 0.5 percent increase in April.

By category, orders for transportation equipment rose 5.6 percent to $29.6 billion in May with civilian aircraft and defense shipbuilding and tanks accounting for the increase.

Orders for electrical machinery fell 6.9 percent to $18.3 billion following a giant 19.6 percent increase in April. The swings in both months came primarily from a rise and fall in demand for defense communication equipment.

Orders for non-electrical machinery fell 1.1 percent to $17.5 billion while orders for primary metals such as steel rose 0.4 percent to $9.3 billion.

Shipments of manufactured goods were up 0.2 percent in May to $196.4 billion after a sharp 0.7 percent drop in April.

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