Orders to Factories Slip
Feb. 05, 1998
WASHINGTON (AP) _ A record plunge in orders for aircraft, linked to Asian financial turmoil, overshadowed a relatively good December for American manufacturers in other industries.
The 63 percent drop, the worst since the Commerce Department began tracking the industry in 1958, helped produce an overall 2.5 percent decline in factory orders, to a seasonally adjusted $336 billion. It was the worst monthly drop in more than five years.
Excluding the volatile aircraft sector, orders rose a moderate 1.6 percent, with strength reported in demand for autos, electrical equipment, industrial machinery, paper, chemicals and food products.
Economists said the aircraft drop is one of the first concrete signs that Asia's problems are hurting the U.S. economy. Last week, Boeing Co. said it expected Asian customers over the next three years to buy 60 fewer planes than anticipated before the financial crisis.
Separately, the Labor Department said the number of applications for unemployment benefits inched up to 303,000 last week _ an increase of 3,000 from the week before.
The past two weeks of relatively low claims, on a seasonally adjusted basis, followed three weeks at a somewhat higher level, ranging between 327,000 and 339,000.
Despite December's blow to aircraft manufacturers, factories during all of 1997 reported a robust 5.3 percent orders increase, compared with 4.6 percent in 1996 and 7.4 percent in 1995.
Shipments of factory goods _ a measure of current production _ rose 1.3 percent in December and were up 5.7 percent for the year as a whole.
The jobless claims increase earlier in January had caused some economists to speculate that robust demand for American labor had begun to wane a bit as the new year began. But the subsequent drop is a sign that the nation's unemployment rate will remain near the 24-year low of 4.6 percent it hit in November.
A four-week average of benefit claims, which smoothes weekly fluctuations, fell to a five-week low of 317,250 last week. Two weeks earlier, the average had risen to a six-month high of 329,250.