Durable-goods orders fall 0.6 percent in March
Wednesday, April 24th 2002, 12:00 am
By: News On 6
WASHINGTON (AP) _ Orders to U.S. factories for big-ticket goods fell 0.6 percent in March, the first drop in the last four months, reflecting slackened demand for cars and computers. New-home sales moved lower.
Sales of new homes went down by 3.1 percent in March, following a strong 6.2 percent rise, the Commerce Department said Wednesday. Even with the decline, 878,000 homes were sold, at an annual rate, a still-robust level.
The decline in orders for costly manufactured goods came after a solid 2.7 percent in February, the department said in another report.
March's performance on durable goods orders _ items expected to last at least three years _ was weaker than many analysts expected. They predicted orders would be flat.
However, other recent economic reports suggest that the battered manufacturing sector _ which saw hundreds of thousands of jobs evaporate during the recession _ is on the comeback trail.
Economists believed Wednesday's durable-goods report was just a temporary rough patch for manufacturers. They didn't view it as a sign that the manufacturing sector is headed for a serious backslide.
``While there is continued movement forward in manufacturing, clearly the sector has not picked up a whole lot of steam,'' said economist Joel Naroff of Naroff Economic Advisors.
To rescue the economy from the clutches of a recession, the Federal Reserve cut short-term interest rates 11 times last year. Citing signs of a turnaround, the Fed opted to leave rates alone in January and March. Many economists believe policy-makers may leave rates unchanged into the summer.
On the housing front, sales dropped 4.4 percent in the Northeast to a rate of 65,000 in March. They plunged by 19.3 percent in the Midwest to a rate of 134,000. In the South, sales dipped 0.2 percent to a rate of 431,000. But in the West, sales rose 3.3 percent to a rate of 248,000.
In the manufacturing report, orders for transportation equipment fell 1.6 percent in March, after a strong 11.2 percent gain in February, mostly reflecting weaker demand for ships and boats, the government said.
Orders for cars and trucks declined for the second month in a row, falling 2.6 percent in March. But orders for airplanes and parts posted a solid 9.5 percent gain, after soaring 60.5 percent the month before.
Excluding orders for transportation equipment _ which can swing a lot from month to month _ durable goods orders edged down by just 0.1 percent.
For computers, orders decreased 3.3 percent in March, after a 3.2 percent decline.
A big cutback by businesses in high-tech equipment was a key reason why the economy fell into a slump.
The government announced that Wednesday that its durable-goods report would no longer include information on orders and shipments of semiconductors. March's report was the first in which the information on the sector was not included. The government collects information from companies that is used to produce the monthly durable-goods report.
The government was forced to drop the breakout on semiconductors because a large number of semiconductor manufacturers choose not to supply the information. Semiconductors comprise between 3 percent and 3.5 percent of total durable-goods in the monthly report.
``It robs us of some information about a key sector that has really been having some problems,'' Naroff said. ``Can we live without it? Yes. But we would prefer not to.''
Elsewhere in the report, orders for machinery fell 1.4 percent in March, after dipping 0.1 percent the month before.
But orders for primary metals, the category that includes steel, rose 1.9 percent, after a 2.3 percent decline.