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Orders for Durable Goods, Sales of Existing Homes Ease

September 25, 2004|From Associated Press

Orders to U.S. factories for big-ticket goods dropped in August, largely weighed down by a sharp decline in demand for commercial airplanes.

The Commerce Department reported Friday that orders for durable goods -- costly manufactured products expected to last at least three years -- declined 0.5% last month after a 1.8% advance in July.

The manufacturing picture, however, looked better when transportation equipment, such as airplanes, was excluded: Orders rose by a solid 2.3% in August. That compared with a flat reading for July and was the biggest increase since March.

"The manufacturing recovery is progressing," said Daniel Meckstroth, chief economist at Manufacturers Alliance/MAPI.

Separately, sales of previously owned homes declined 2.7% in August from July to a seasonally adjusted annual rate of 6.54 million units, the National Assn. of Realtors reported. Even with the drop, which followed a 2.9% decrease in July, the pace of sales was considered healthy, economists said.

"Since April, we've experienced three out of the four strongest months on record for existing-home sales, and August was the sixth-highest," said David Lereah, the association's chief economist.

On the manufacturing front, economists had forecast a 0.3% decline in overall durable-goods orders for August based on the expectation that demand for commercial airplanes would decline after shooting through the roof in July. Orders for commercial aircraft declined 43.8% in August, compared with a 103.6% surge in July. Bookings for military airplanes and parts also declined in August.

That drop in airplane bookings masked gains elsewhere. Orders for cars, computers, communications equipment, electrical equipment and appliances, as well as fabricated metal products, all went up in August.

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