New orders for manufactured goods fell for the second consecutive month in July, the Commerce Department reported yesterday.
Orders dropped by $2.8 billion, or 2 percent, primarily because of declines in transportation equipment, electrical machinery and primary metals industries.
Overall, new orders for durable good fell $3.5 billion or 4.6 percent, somewhat less than advance data had shown, the department said. Orders for nondurable goods rose by $700 million.
Shipments of manufactured products in July rose by $1.5 billion or 1.1 percent. Coupled with the drop in new orders, that meant that backlogs of unfilled orders shrank for the first time this year.
Meanwhile, manufacturers' inventories continued to rise, with the totals going up in nondurable goods industries almost as fast as in durable goods industries. Such a development is almost always the result of involuntary accumulations of unsold goods, a point underscored by the fact that inventories dropped in those industries making nondurables that had order backlogs.
Part of the decline in new orders for transportation equipment was the result of a sharp drop in July aircarft orders, which had risen substantially in June. However, at $4.1 billion, the July figure was the lowest for aircraft orders for any month this year.
New orders for automotive equipment slumped by almost $1 billion, to $11.1 billion, reflecting the much slower pace of automobile and truck sales earlier in the summer.
The picture of the state of manufacturing industries presented by these numbers is consistent with a slowing economy but one not yet contracting sharply.
The rising level of inventories, however, is beginning to worry some economists. They believe that some actual liquidation of inventories may have to take place late this year or early in 1980 to get stocks back in line with sales. If that occurs, the present slowdown could turn into a much more traditional form of post-war recessions, they argue.
At the moment, one of the stronger sectors of the economy is capital spending by business. But even there new orders are declining. In July, orders for non-defense capital goods fell 6.6 percent to a level of $20.4 billion.