Durable-Goods Orders Down Again in May

Fed Chairman Alan Greenspan, speaking on Capitol Hill less than two weeks ago, reinforced that impression and added that the pace of increases "is very likely to be measured over the quarters ahead" -- providing a phrase that some analysts believe Fed policymakers may adopt in the statement they issue after the meeting.

Policymakers are not sure whether recent price increases will be temporary or signal higher inflation. They do not know whether the recent booming pace of job creation will continue or peter out. They are concerned that Chinese leaders' efforts to cool their overheated economy could ripple through the global economy. And Greenspan highlighted continuing anxieties about the effects on the economy of more terrorist attacks.

Economists also are unsure whether the recent cooling of the economy will mark a pause, or a shift to a slower rate of expansion in the second half of the year.

Durable goods orders declined in April and May after surging the previous two months and rising much of the last year.

Jerry Jasinowski, president of the National Association of Manufacturers, described the decline as "quick breather after a year-long sprint."

"The manufacturing recovery remains on solid footing," he said.

Economists noted other recent signs that the manufacturing sector is gaining strength. Overall U.S. factory production rose 0.9 percent last month after a 0.7 percent increase in April, the Fed reported last week. Manufacturers increased payrolls in May for the fourth consecutive month.

The durable goods report "seems puzzling" compared with the other manufacturing data, said Peter E. Kretzmer, senior economist with Bank of America Corp. But, he said, the figures imply "that the very rapid growth in high-tech production in the past year is set to moderate in results for June and beyond."