WASHINGTON — Orders to U.S. factories for durable goods edged up slightly last month as a drop in demand for military equipment offset gains in other sectors, the government said Tuesday.
The Commerce Department said new orders for durable goods--those expected to last three years or more--rose to a seasonally adjusted $111.09 billion in November, an increase of $33 million over October.
The minuscule 0.03% increase followed a 1.6% October advance and a 2.5% September gain.
Much of the weakness came from a 3.7% drop in demand for defense equipment, a category that shows wide swings from month to month. Without that decline, new orders would have risen 0.4% in November.
Analysts were likely to view this increase as an indication that the manufacturing sector was showing no signs of panic in the month following the stock market collapse.
On Monday, doubts about the government's ability to control spending, combined with uncertainty over the direction of oil prices and the overall economy, left the financial markets in mixed shape.
Investor skepticism was intensified by a federal government report of a rapidly rising deficit for fiscal 1988, reinforcing predictions by private analysts that the shortfall would jump sharply after falling in fiscal 1987.
The Treasury Department said the federal government accrued a $25.77-billion budget deficit last month, bringing the deficit in the first two months of the new fiscal year to $56.51 billion, an 8% increase over the same period a year earlier.
The deficit for the entire 1987 fiscal year, which ended Sept. 30, shrank to $148.01 billion from an all-time high of $221.1 billion in 1986.
The Congressional Budget Office has predicted that the deficit for 1988 would rise to about $150 billion, but many private forecasters are more pessimistic, projecting a deficit of $175 billion even when taking into account $30.2 billion in expected deficit reductions.
Much of the pessimism has arisen because the 1987 budget figures were improved by a one-time infusion of tax revenue generated by the overhaul of the tax system. That revenue will not be available this year.
Skepticism about the nation's ability to spend within its means played a role in the world stock collapse of October and remains a destabilizing element in the markets, many economists contend.
In foreign exchange trading Monday, the dollar was unchanged, though traders said the currency's underlying trend was for gradual depreciation.
On Wall Street, stocks were mixed, with the Dow Jones index of 30 industrials rising 15.08 to 1,990.38, extending its gain since Dec. 4 to 223.74 points.
In the bond market, which can provide clues to the direction of interest rates, prices fell in quiet trading, pushing the yield on long-term issues back above 9%.
Analysts said bondholders were concerned about the government's deficit spending as well as slightly higher oil prices, which raise the possibility of higher inflation and erode the value of fixed-income investments.