Newspaper article THE JOURNAL RECORD

Drop in Aircraft Sales Cuts Factory Orders

Newspaper article THE JOURNAL RECORD

Drop in Aircraft Sales Cuts Factory Orders

Article excerpt

WASHINGTON (AP) _ A sharp drop in military and commercial aircraft sales in February caused the first decline in orders to U.S. factories since last summer.

But analysts said a closer look at Wednesday's report by the Commerce Department discloses underlying strength in the manufacturing sector of the economy.

Orders to U.S. factories fell 1 percent in February, breaking a six-month string of advances, the department said. Orders for both durable and non-durable goods totaled a seasonally adjusted $269.9 billion, down from $272.6 billion in January.

"I would urge people to focus on details of this report," said Marilyn Schaja, an economist with Donaldson, Lufkin Jenrette Securities Corp. in New York City. Excluding the highly volatile defense and aircraft orders, she said, "It was the eighth increase over the last nine months."

Orders for non-defense capital goods excluding aircraft rose 4.9 percent in February. These orders often are a barometer of business plans to expand and modernize.

Economists for Merrill Lynch Co. said they are encouraged that new orders for computers and communications equipment, possibly a better indicator of manufacturing growth, rebounded in February after a January drop.

The stormy winter weather in much of the nation also may have caused disruptions that held down February orders, analysts said.

Prior to February, orders had risen every month since a 1.9 percent decline last July.

Inventories in February rose 0.3 percent to $380 billion, the second straight increase and matching the rise in January.

"It's a turning point," said Michael P. Niemira of Mitsubishi Bank in New York City. "Manufacturers have been extremely reluctant to increase inventories. Now they seem to be just starting to accept that demand is up will continue to be up. …

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