New orders for manufactured durable goods rose 4.1 percent in May to $103.8 billion on the strength of a surge in defense orders, but the total still remained below January's level, the Commerce Department reported yesterday.
Nondefense capital goods orders, often an indicator of business investment intentions, rose 0.9 percent after sharp declines in March and April. At the May level of $25.6 billion, such orders were lower than in any month last year except October.
Commerce Secretary Malcolm Baldrige said in a statement that the 4.1 percent gain in durable goods orders "offsets most of the recent setbacks." Even so, "Bookings in May were only 2.9 percent above their average during the last 12 months," he noted.
The report underscored the importance of defense orders to American manufacturers, who, Baldrige said, are "suffering from intense foreign competition" in other types of goods. Volatile defense orders jumped from $6.1 billion to $9.1 billion, a 50 percent increase.
"The backlog of defense capital goods orders , which includes ordnance, communication equipment, aircraft, aircraft engines and parts and shipbuilding, accounts for just over 50 percent of the total capital goods backlog and 40 percent of the total durable goods backlog," the report said. Unfilled orders for nondefense goods fell 0.8 percent in May and have dropped by an average of 0.6 percent a month since July 1984.
Most of the overall gain in orders came in transportation equipment, which was up $3 billion, or 12.6 percent, to $27 billion. Excluding defense, transportation orders were flat. Machinery orders, the only area of strength outside defense, rose 4.1 percent, or $1.3 billion, to $32.5 billion. Following a large gain in April, primary-metals orders dropped 7.1 percent to $10.4 billion, the average for the last 12 months, Commerce said.
Shipments of durable goods rose $500 million, or 0.5 percent, to $102.8 billion. "Shipments so far this year have been very sluggish, averaging $102.2 billion since January," the report said.