Military equipment keeps durable-goods orders on the plus side

American factory orders surged 2.4 percent last month for large manufactured items, the government reported Wednesday, but the increase came from a 41.1 percent jump in demand for military equipment, mostly new warships. The Commerce Department said that excluding the military order category, orders for durable goods fell 0.2 percent, the second consecutive monthly drop.

The key category of nondefense capital goods, a measure of business expansion plans, also fell for the second straight month. It was down 2.6 percent to $34 billion, following a 10.2 percent drop in September, the largest since January 1986.

Durable goods are defined as big items ranging from refrigerators to tanks and aircraft that are expected to last at least three years. Orders are an important barometer of manufacturing strength, but economists discount the military and transportation categories because they fluctuate sharply from month to month.

The weak dollar fell further in New York in early trading Wednesday in reaction to the durable goods report, evidently reflecting pessimism about the ability of US manufacturers to compete well in world markets without a cheaper currency.

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