New orders for goods produced by the nation's factories fell 5.5 percent in April, the sharpest drop in more than five years, the Commerce Department reported yesterday.
Reflecting both the recent high interest rates and the spreading recession, outlays for new construction also fell 3.6 percent in April following a record 5.4 percent drop in March, the department said in a separate report.
The level of new orders fell for the third consecutive month to a seasonally adjusted $143.77 billion. The decline in March was 1.6 percent instead of the 0.9 percent originally reported, the department said.
Factory orders for durable goods, including autos and trucks, dropped 6.6 percent to $72.46 billion in April following a 4.3 percent decline in March. New orders for nondurables went down 4.3 percent in April to $71.31 billion.
The declines were "pretty wide-spread," one Commerce analyst said, "Everything is down in April except aircraft."
Many forecasters now expect the nation's output of goods and services to fall at about an 8 percent annual rate this quarter. The drops in new orders, particularly for durable goods, suggest the overall decline could well continue through the second half of the year.
Carter administration officials, who still hope the drop in the economy will be limited, are watching closely to see if orders in the key nondefense capital goods category begin to fall sharply. So far, they haven't.
Most investment goods bought by businesses are in this category, which fell only 1.8 percent in April to $22.59 billion after a large 5.2 percent increase the previous month.
With sales dropping swiftly, factory inventories are rising. They went up 1.5 percent in March and another 1.7 percent -- to $242.59 billion -- in Arpil, the department said.
Construction outlays in April were only 2.4 percent above their level of Arpil 1979 and were a full 5 percent lower after adjustment for inflation.
Spending for private construction fell 3.8 percent from March to April, to a seasonally adjusted annual rate of $169.4 billion.