Durables Orders Post 0.9% Drop For Last Month --- Bookings for Non-Defense Capital Goods Fall 6.3%, Third Decline in a Row
WASHINGTON -- Orders for durable manufactured products dropped 0.9% in August, while a related indicator of business investment plummeted for the third consecutive month, the Commerce Department said.</br></br>The orders report is a crude and highly volatile measure of business activity, but it does suggest the economy may be slowing more sharply than most economists have predicted.</br></br>Orders for non-defense capital goods, an indicator of business plans to invest in new equipment, plunged 6.3% in August, following a 2.5% decline in July and a 3.2% drop in June. Many analysts had been counting on business investment to propel the economy in coming months, now that consumer spending seems to have slowed. But if orders for capital goods continue to decline and consumer spending stays weak, the economic expansion could fizzle out in the next few months.</br></br>Nevertheless, economic forecasters continue to believe that the economy will perk up this fall. "The key is September and October," said Lawrence Chimerine, chairman of Chase Econometrics in Bala-Cynwyd, Pa. "Some of the weakness in the summer was temporary. My own feeling is we will see moderate growth over the rest of this year and 1985."</br></br>"I think we will see some pickup in the fourth quarter," agreed John McAuley, vice president for economic research at Chemical Bank, New York. Analysts are looking for growth in the nation's output, or gross national product, at an annual rate of 3% to 5% in the fourth quarter after adjustment for inflation, compared with the Commerce Department's estimate of 3.6% for the third quarter.