July Orders for Manufactured Goods Up 2.4%

WASHINGTON —  New orders for costly manufactured goods surged unexpectedly in July as brisk demand for new airplanes and electronic products offset declines caused by a lengthy General Motors Corp. strike, the Commerce Department said Wednesday.

Analysts said a 2.4% rise in the value of new orders last month to a seasonally adjusted $187.5 billion underlined the resilience of the U.S. economy amid waning overseas markets in Asia.

It was the strongest monthly increase since a 4.4% jump eight months earlier, in November. In addition, June orders were revised to show a modest 0.2% increase instead of a 0.1% falloff.

Excluding transportation products that account for more than one-fifth of total manufacturing activity, July orders were up even more robustly by 3%--the biggest monthly gain in nearly a year since a 3.2% rise in August 1997.

“The engine of manufacturing growth is gaining steam,” said Jerry Jasinowski, president of the National Assn. of Manufacturers.

He noted that the eight-week GM strike, which was settled at the end of July, had shut down more than 100 parts and assembly plants but they now are back in full production. , which will mean higher order volumes in coming months.

The biggest jump in July orders was for electronic and electrical equipment, up a booming 12% to $33.84 billion following a 3.7% June increase. The category covers everything from telephone and communications equipment to electronic components like circuit boards and semiconductors.

Firms in virtually all industries are scrambling to update their computer systems so that they will function normally when 2000 arrives.

U.S. exports to Asian countries, still struggling with financial and economic crises that set in a year ago, have been declining but strong job growth and rising incomes in the United States have bolstered consumer spending.

July orders for transportation goods, boosted by aircraft orders, increased slightly by 0.3%, to $39.5 billion, after drops of 7.2% in June and 4.5% in May. The department said orders for aircraft and parts were strong enough to stave off weaker new-car demand.

Analysts have expected a slowdown in the pace of manufacturing--which accounts for about 18% of total national economic activity--primarily on the basis of weaker sales to Asia since GM orders were expected to bounce back.

“It may be a bit premature to write off manufacturing activity, as strength in private domestic demand seems to be offsetting a good chunk of the declines in manufactured goods for export,” economist Veronica White of First Union Corp. in Charlotte, N.C., said after the July durable goods report was issued.

Jasinowski from the manufacturers’ association said Asia remained a “real problem,” since companies that make hard goods account for about 60% of total U.S. exports but noted there were mitigating circumstances.

The only category of goods that showed an orders dip in July was primary metals, down 0.2% to $14.4 billion following a 3.2% fall in June. Overall order backlogs increased in July 0.3% to $506.2 billion--the first increase since April and following a 0.7% drop in June.

Durable Goods

New orders, in billions, seasonally adjusted:

July: $187.5 billion

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Source: Commerce Department