New orders for factory goods dropped 0.9 percent in January to mark the seventh decline in 10 months, the Commerce Department said yesterday.
The January decline followed a drop of 0.1 percent in December. A key measure of future business activity, new orders for nondefense capital goods, dropped 13.2 percent in January, following a 1.9 percent decline in December.
New orders for factory goods have "turned quite sluggish" recently, due to a slowdown in economic growth and the diversion of demand from domestically made equipment to imports, said Robert Ortner, the Commerce Department's chief economist.
"New orders are giving us a dual story," Ortner said. The sluggish behavior of new orders will mean more moderate economic growth in the future, because businesses will be producing at a slower pace, he said. Additionally, the international trade picture will continue to deteriorate as businesses purchase more imported goods priced lower because of the rising value of the dollar. That will provide a further drag on U.S. economic growth, Ortner explained.
The surge in equipment imports has been so strong of late that the United States' $45 billion trade surplus in capital goods chalked up in 1981 now "has been obliterated," and "this year we will have a deficit," he said.
Orders for durable goods rose 1.8 percent in January following a decline of 2 percent in December, the Commerce Department said. Durable goods are those that generally last for about three years.
New orders for nondurable goods dropped 3.9 percent in January following a 2 percent increase in December.
Inventories dropped 0.2 percent in January after a 0.1 percent decline in December, and shipments of factory goods dropped 1.7 percent in January. Shipments had risen 1.8 percent in December, Commerce said.