New orders received by manufacturers of durable goods fell 2.1 percent in December, but the decline was due largely to a sharp drop in defense orders which had surged in November, the Commerce Department reported yesterday.
Nevertheless, the department's advance report on orders and shipments of long-lasting items indicated that future production gains may be moderate, analysts said.
The total of new orders received fell $2.1 billion to a seasonally adjusted $101.9 billion. Shipments of durables rose 0.6 percent, or about $500 million, to a level of $102.4 billion. The combination of a drop in orders and an increase in shipments meant that order backlogs fell 0.1 percent to a level of $346.2 billion.
Defense orders dropped 17.6 percent after more than doubling in November. Orders for nondefense capital goods, an indicator of future trends in business capital investment, also fell by 5.1 percent, or $1.4 billion, to a level of $25.8 billion.
Commerce Secretary Malcolm Baldrige said the figures showed that most of November's strong 8.3 percent rise in new orders for durables was retained last month. For most of 1984, new orders "were on a plateau," he said, characterizing the picture for nondefense goods as "still soft" at a level 3.3 percent lower than their peak last May.
"Recent efforts to curtail inventory investment have held down orders, and strong foreign competition has meant some lost markets," the Commerce secretary continued. "We must intensify efforts to cut budget deficits to reduce interest rates further and, eventually, lower the foreign exchange value of the dollar."
The December decline in orders was widespread among industries:
* Primary-metals orders fell 4.6 percent after rising 2.4 percent in November and 3.1 percent in October.
* Orders for machinery went down 1.1 percent following a 3.1 percent increase in November.
* Transportation-equipment orders fell 6.7 percent because of the decline in military contracts.
* Orders for household durable goods such as appliances and furniture rose 9.6 percent, matching that category's decline in November.
Despite the drop in new defense orders, the incoming total of $8.5 billion was still $2.1 billion larger than the value of shipments. Thus, the orders backlog rose to $129.9 billion, equal to about 20 months' worth of shipments, "indicating continued growth in production," Baldrige noted in his statement.