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Factory Orders Gain; New Jobless Claims Fall : Economy: Analysts hesitate, however, to say the reports indicate an upturn.

August 06, 1993|From Times Wire Services

WASHINGTON — Factory orders rose in June after three straight months of declines, the government said Thursday, but analysts said they saw little evidence that the economy is picking up momentum.

In a separate report, the government reported that the number of workers filing for state unemployment benefits declined in the latest week.

Analysts expressed caution in weighing the new economic evidence, arguing that for the most part, they saw little if any change from an underlying pattern of an economy that is struggling to keep its momentum under way.

"I think we are seeing data that has been artificially affected by special factors," said Allan Leslie of the Discount Corp.

Specifically, the Commerce Department said June factory orders rose a seasonally adjusted 2.6% to $254.8 billion following a revised 1.6% decline in May orders.

Factory shipments also rose, gaining 1.8% to $258.7 billion, while inventories decreased 0.1% to $381.4 billion from May levels.

However, so-called unfilled orders declined, evidence that companies are having few problems in keeping up with the demand for their products.

Orders were slightly above Wall Street economists' expectations of a 2% rise in business.

The new data comes as the economy is moving ahead slowly. Gross domestic product rose at a sluggish 1.6% rate in the second quarter after a tepid 0.7% gain in the first three months of the year.

Federal Reserve banks Wednesday released a report showing that the economy was moving ahead slowly to moderately in June and the first half of July.

The factory orders gain was the largest in six months. The May decline previously had been reported as a 1.4% drop.

The June increase was led by a 3.8% gain in durable goods orders, which originally was reported last week and was left unrevised.

The increase in the durable goods sector was led by transportation, which jumped a whopping 15.1%, reflecting activity in aircraft and aircraft parts that is not likely to be repeated at that level.

Excluding transportation, new orders for durable goods rose 0.3%.

Non-durable goods rose much more modestly than durable goods, showing an increase of 1.3%, but analysts said that increase was probably more significant.

"Non-durables are less sensitive to special factors like a bunching of aircraft orders so they are more genuine," said Michael Moran of Daiwa Securities.

In the jobless report, the Labor Department reported that the total number of new claims for unemployment benefits dropped to 336,000 last week, down from 396,000 in the previous week.

It was a larger-than-expected improvement, but economists noted that it came after the previous week's numbers had been skewed by a temporary shutdown at General Motors Corp. for retooling.

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