Soaring demand for aircraft pushes orders up by largest amount in 6 months

Thursday, October 26th 2006, 8:48 am
By: News On 6

WASHINGTON (AP) _ Orders to U.S. factories for big-ticket manufactured goods, powered by a huge jump in demand for commercial jetliners, soared in September by the largest amount in more than six years.

The Commerce Department reported that orders for durable goods rose by 7.8 percent last month to $226.7 billion. The increase followed two consecutive months of declines and was the biggest gain since June 2000.

The improvement was more than triple the 2.3 percent gain that Wall Street had been expecting, but virtually all of the strength came from a giant 183.2 percent increase in orders for commercial aircraft. Outside of transportation, orders were up a far weaker 0.1 percent.

In a second report, the Labor Department said the number of newly laid off workers filing claims for unemployment benefits rose by 8,000 last week to a seasonally adjusted 308,000. That increase was in line with expectations.

The September 7.8 percent increase in factory orders followed declines of 0.1 percent in August and 2.8 percent in July. Despite last month's jump, analysts believe that the factory sector is slowing under the impact of a weakening overall economy.

The economy began the year with growth at a sizzling pace of 5.6 percent at an annual rate but saw that slow to 2.6 percent in the spring and analysts believe overall economic growth in the just-completed July-September quarter slowed even further to around 2 percent or less. The government will report the actual third quarter figure on Friday.

For September, transportation orders rose by 27.6 percent as the big jump in demand for commercial aircraft offset a 6.1 percent drop in orders to automakers, who have been struggling recently under the impact of weak sales of trucks and sport utility vehicles.

The rise in commercial airplane orders had been expected, given that Boeing Co. booked new orders for 175 planes, up from 30 in the prior month.

The 0.1 percent increase in orders excluding transportation was the first advance in this category since June. Orders excluding transportation had fallen by a sharp 1.5 percent in August and 0.1 percent in July, signaling that the manufacturing sector was slowing.

Outside of the booming aircraft sector, orders were generally weak across the board. Demand for primary metals such as steel fell by 1 percent while orders for computers were down 2.3 percent and communications equipment dropped by 5.3 percent. Orders for machinery did post a 1.3 percent increase.

Orders for non-defense capital goods, excluding aircraft, considered a good barometer of business investment, did increase by a healthy 1.1 percent, the best showing since May.