Durable Goods Orders Plunged 6.2% in March --- Third Drop in a Row Signals Recession Is Not Over In Manufacturing Sector
WASHINGTON -- A dive in orders for big-ticket factory goods in March erased hopes that the recession will end for manufacturing in the next month or two.</br></br>Orders to manufacturers for durable goods -- items intended to last more than three years, such as cars, appliances or heavy machinery -- sank 6.2% in March to the lowest level since August 1987, the Commerce Department reported. The drop, the third in a row, followed declines of 0.2% in February and 2.0% in January, and left orders 15.4% below a year earlier.</br></br>"Today's orders are tomorrow's production," said Stuart Hoffman, economist with PNC Financial Corp., a Pittsburgh bank holding company. "So I think this signals that production and jobs {in manufacturing} will be down in the second quarter."</br></br>The majority of economists believe the economy will turn around and grow slightly in the second period, according to the Blue Chip Economic Indicators, a survey of business economists and consulting groups. And some sectors of the economy, such as housing, have shown signs of bottoming out. But the durable-goods report was strong evidence for those who believe that the recovery may be a few months further down the road and that growth won't restart until the third quarter.</br></br>"This puts to rest the notion that with the end of the war came the end of the recession," said Nancy Sidhu, an economist with Security Pacific National Bank. Ms. Sidhu pointed in particular to a 10.3% slide in orders for nondefense capital goods, closely watched as a barometer of the industrial sector's investment and production plans.