Despite ongoing and better-than-expected U.S. economic growth and manufacturing shipments, U.S. Commerce Department data showed that new orders in the aggregated Measuring and Controlling Instruments (SIC 382) industry group dropped slightly at the end of 1997.

New orders in 4Q97 for SIC 382 firms rose by 7.1% over 1996's final quarter. Compared to 3Q97, the dollar value of 4Q97 orders grew by 5.4%, though this was well below the 9.3% gain recorded between 3Q96 and 4Q96. Likewise, orders in December 1997 totalled $4.14 billion, which was 0.4% less than December 1996's total orders. This was the first time in 15 months that orders failed to post a gain over the same month a year earlier.

This slip in instrument orders occurred even as the nation's real GDP increased at a solid 4.3% annual rate during 4Q97. This was the latest in a long string of better-than-average reports on U.S. economic growth, which has been driven in large measure by business investment in new plants and equipment. For all of 1997, GDP increased by 3.8%; the strongest growth in the U.S. economy since 1988.

Though business investment jumped by 12.2% during 1997, both plant and equipment purchases contracted 3.6% during 4Q97 after increasing by 16.9% during the two previous quarters. The crisis in Asian currency and financial markets undoubtedly played a major role in this slowdown as American firms waited to see the implications of the crisis for their businesses.

In any event, SIC 382 shipments outpaced orders during the last three months of 1997. For example, 4Q97 shipments were 7.9% ahead of 4Q96, although the dollar value actually fell by 1.4% from the 3Q97 total. Nevertheless, the dollar value of December 1997 shipments bested the December 1996 total by a solid 7.3%.