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Orders to Factories Fall 0.3% in June

August 01, 1986|Associated Press

WASHINGTON — Orders to U.S. factories for manufactured goods dropped 0.3% in June, the fifth decline in the past six months, the government reported Thursday.

The Commerce Department said orders, which were held back by a steep decline in demand for defense equipment, totaled $191.5 billion, $586 million below the May level and 4.9% below their high of $201.2 billion in December.

Since December, orders have posted an increase only in April, a minuscule 0.1% advance that did little to offset weakness in other months. Orders fell 0.5% in May.

Analysts said the June report was simply a continuation of the weakness in the manufacturing side of the economy, which has been in a virtual recession this year with the poor performance by smokestack America dragging down overall economic growth. The economy, as measured by the gross national product, expanded at a sluggish 2.5% rate from January through June, far below Reagan Administration expectations.

David Berson, senior economist at Wharton Econometrics of Philadelphia, predicted that economic growth in the July-September quarter would show no improvement from the growth rate for the first six months. But he said growth should pick up to a 3.9% rate in the final three months of the year as a slow improvement in the trade deficit boosts domestic production.

Still Confident

"We are not in the group which is looking for the economy to slump into a recession," he said. "We still think all of the signs are there for a pickup later this year and even stronger growth in 1987."

The government was scheduled to release Thursday the June report on the index of leading indicators, the main forecasting gauge of future activity. However, the release was delayed until today because of questions about the data making up one of the components of the index.

In the report on factory orders, demand for durable goods, items expected to last three or more years, rose a tiny 0.1% in June. This was a sharp downward revision from an advance report a week ago that showed durable goods orders rising 2.1%.

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