1 New orders for durable goods fell back slightly in September after shooting up the month before, reflecting weakening auto demand after a spurt of orders for new 1990 models, the Commerce Department reported.
2 Orders for military equipment, household appliances, machinery and other goods expected to last at least three years dipped 0.1% last month, to $126.68 billion, after leaping 3.9% in August, the department said.
3 Most analysts had expected a sharper decline after the steep rise in August.
4 Moreover, a recent government report showing widespread layoffs in manufacturing had contributed to perceptions that the manufacturing sector of the economy had slowed to a crawl.
5 But many economists pointed to a 1.8% September rise in orders outside the volatile transportation category.
6 That 'suggests the manufacturing sector is not falling apart,' said Sally Kleinman, an economist at Manufacturers Hanover Securities Corp. in New York.
7 She added, however: 'It is not robust by any means.'
8 While a decline in orders for cars and civilian airplanes pulled down the orders total, an enormous jump in orders for heavy military equipment propped it up.
9 Orders for capital defense goods skyrocketed 56%, and a government analyst said nearly all areas saw increases, including airplanes, missiles, ships, tanks and communications equipment.
10 Orders for military goods usually catapult in September, government officials say, as the Pentagon scrambles to spend its money before the new fiscal year begins Oct. 1.
11 While all the numbers in the durable goods report were adjusted for seasonal fluctuations, a Commerce Department analyst said that the adjustment probably didn't factor out all of the wide-ranging surge in defense orders.
12 Without the increase in defense bookings, September orders would have plummeted 3.9%.
13 Analysts were most unsettled by evidence the backlog of orders at factories is slipping.
14 Unfilled orders for durable goods rose 0.4% in September, to $476.14 billion, after declining for the first time in 2 1/2 years in August.
15 In July unfilled orders grew 1%.
16 But analysts noted that excluding transportation-where what they believe was a temporary surge in auto demand pushed up the figures-order backlogs have declined for three months in a row.
17 'It means we're eating into the bread that keeps us going.
18 That is a little disturbing,' Ms. Kleinman said. 'It also means if you have a real drop-off in orders, production will likely fall off very quickly because there is less to keep things going.'
19 Capital goods orders outside of the defense sector tumbled for the second month in a row, posting a 5.6% drop after a 10.3% decline.
20 Such steep drops in a category seen as a barometer of business investment would customarily be grave news for the economy.
21 But a Commerce Department analyst said that in both months orders would have risen had it not been for a drop in civilian aircraft bookings, a category that is showing declines only after a huge surge earlier this year.
22 Still, Milton Hudson, senior economic adviser at Morgan Guaranty Trust Co. in New York, said: 'If you look back a half-year or so the evidence was pretty good of affirmative strength in the capital-goods sector.
23 Now at least there are question marks about that, and without any question the pace of growth has slowed.'

Most analysts had expected a sharper decline after the steep rise in August .
expected a sharper
why did they expect that?