WASHINGTON -- U.S. factory orders rose in August for the third straight month, though an increase in unsold goods reinforced the view that the economy is cooling in the closing months of the year, government figures yesterday showed.
"We're downshifting," said Bruce Steinberg, chief economist at Merrill Lynch & Co. in New York. Growth will slow to 2 percent in the fourth quarter, from the economy's better than 4 percent gallop in the first half of the year, he said.
Factory orders posted a 1.3 percent increase in August, helped by the strongest rise in demand for electronic components in nearly four decades, Commerce Department figures showed. During July, manufacturers' orders increased 0.5 percent.
However, inventories -- or unsold goods sitting at manufacturers -- rose 0.4 percent in August, the same as July.
Job growth may be slowing, too. First-time claims for unemployment benefits were little changed last week, the Labor Department said yesterday. Claims rose 1,000 to 308,000, a level that suggests still-vigorous hiring. However, economists won't be surprised if a close reading of today's report on September employment shows sub-par job creation.
On the surface the report is expected to show that the economy added 332,000 jobs last month, more than the 228,000 average monthly increase for the first eight months of the year. After adjusting the statistics to discount the return of striking workers at United Parcel Service of America, though, net job growth was probably less than 180,000, analysts said.
Outside of the UPS effect, however, tomorrow's payroll report will show "we're moderating," Steinberg said.
August's rise in factory orders to a seasonally adjusted $335.457 billion followed a revised 0.5 percent gain in July to $331.138 billion. Previously, the government estimated July orders rose 0.2 percent to $330.282 billion.
The level of August orders was close to expectations; analysts had expected a 1.4 percent increase to about $334.9 billion.
Orders excluding the volatile category of aircraft and other transportation equipment increased 0.8 percent during August, after rising 1.0 percent during July. Excluding the defense industry, factory orders increased 1.3 percent in August, after rising 1.6 percent during July.
Orders for durable goods, which are made to last three or more years, advanced 2.7 percent in August after increasing 0.1 percent in July. Demand for electronic equipment and aircraft accounted for the bulk of the increase. Orders for electronic components jumped 76.9 percent in August, the largest increase since a 167.6 percent surge in February 1960.
Pub Date: 10/03/97