Record decline in orders suggests slowing economy

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Thursday, Aug. 24, 2000 | 11:42 a.m.

THE ASSOCIATED PRESS

WASHINGTON -- U.S. factory orders for aircraft, electrical equipment and other durable goods posted a record decline in July, suggesting manufacturers may scale back production in the months ahead as the economy slows.

Orders for big-ticket items plunged 12.4 percent last month, more than reversing a June increase of 9.5 percent, the Commerce Department said today. Excluding transportation equipment, orders fell 4.8 percent in July after rising 0.5 percent the month before.

Signs of a slowdown in manufacturing -- along with a fourth straight weekly increase in jobless claims -- signal less growth and less threat of accelerating inflation.

"This is exactly what the Federal Reserve wanted to achieve" in raising interest rates six times since June 1999, said Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio. Fed policy-makers kept the overnight bank lending rate at 6.5 percent Tuesday, citing slower growth and the benefits of rising worker productivity.