Factory orders off by less than was forecast

WASHINGTON - Orders to U.S. factories for big-ticket items besides autos and airplanes showed surprising strength in April, raising hopes that manufacturing can help the economy shake off the slumping housing market and credit crisis.

Overall, orders for durable goods dipped 0.5 percent in April, reflecting steep declines in orders for commercial aircraft and autos, the Commerce Department reported yesterday.

But the decline was just one-third of what experts expected. Moreover, without the volatile transportation sector, orders rose 2.5 percent, the largest gain in nine months. This reflected strength in such areas as heavy machinery; primary metals, such as steel; and electrical equipment and appliances.

Economists said this indicated that the economy was entering the April-through-June period with some momentum in manufacturing, a sector critical to helping keep the country from recession.

"The economy is soft, but with demand for big-ticket items holding in there, a sharp slowdown does not seem to be in the works," said Joel Naroff, chief economist at Naroff Economic Advisors, of Holland, Pa.

Analysts said manufacturing was benefiting from a strong export demand. U.S. manufacturers are getting a boost from the weaker dollar, which makes their products cheaper in overseas markets, and by the fact that businesses did not go on an investment-spending binge before the current slowdown.

The durable-goods report showed that demand in transportation fell 8 percent. There were a 24.4 percent drop in orders for commercial aircraft and a 3.3 percent decline in orders for motor vehicles.

But demand for primary metals, which includes steel, rose 2.8 percent. Machinery orders were up 4.2 percent, and demand for communications equipment rose 2.2 percent. Orders for electrical equipment and appliances surged 27.8 percent.