Friday, August 04, 2000

Factory orders also indicator

Bloomberg News and The Associated Press

        WASHINGTON — U.S. factory orders jumped 5.5 percent in June, the biggest advance since July 1991. But excluding a record increase for aircraft and other transportation equipment, those orders rose just 0.3 percent in June.

        That's compared with a 4.4 percent May increase, the Commerce Department said.

        The slowdown in orders, combined with sluggish sales at the nation's retailers last month suggest the economy is cooling after a series of Federal Reserve interest-rate increases that began last year.

        “The economy is throttling back as consumers feel the effect of higher interest rates and a stock market that has been moving sideways for most of the year,” said Mark Zandi, economist at, a consulting firm in West Chester, Pa.

        Analysts said the split in Thursday's reports between robust demand in manufacturing and lagging consumer sales was representative of what they think is occurring in the economy.

        Consumers, the main engine for the prolonged economic expansion in a record 10th year, are growing more cautious as businesses accelerate their investments in computers and other high-tech equipment to keep ahead of the competition.

        The strength in the June orders report was transpor tation equipment, primarily aircraft, the Commerce Department said.

        Boeing Co., the world's largest maker of aircraft, reported 139 orders for June, including a contract to sell at least 94 CFM56-powered 737 jetliners valued at $4.5 billion to Southwest Airlines Co. The CFM56 engine is a joint venture of GE Aircraft Engines and Snecma of France; final assembly is done at GEAE in Evendale and at Snecma's plant in Villaroche, France.


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