The US Department of Commerce said factory orders fell 1.7% in February. Orders for nondurable goods such as petroleum, chemicals and paper products were down 0.4 percent.
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The decline reported Monday by the Commerce Department was the third in the last four months and reversed January’s downwardly revised 1.2% increase. This represented the tenth decline in the last 11 months.
These so-called core capital goods are seen as a measure of business confidence and spending plans.
The report comes after news of weaker trade data and consumer spending, indicated that economic growth slowed more than expected in the first quarter after falling to an annualized pace of just 1.4% in the fourth quarter.
Orders in a category that serves as a proxy for business investment declined 2.5 per cent after a 3.3 per cent increase in January.
Weak global demand and a stronger dollar have put excess pressure on manufacturing, which accounts for 12% of the economy. Manufacturing has also been hit by investment cuts from energy firms due to slumping oil prices. “We remain hopeful for some upcoming improvement in the data as many of these headwinds have either passed or faded”, said Daniel Silver, an economist at JPMorgan in NY. Shipments excluding transportation, fell by 0.6 percent, compared to a 1.3 percent decrease in the previous month.
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Inventories of factory goods dropped for an eighth straight month, suggesting factories were making progress in reducing the inventory glut. This was revised down from a preliminary reading of -2.8% and 1% respectively. A reading over 50 signals growth in the manufacturing sector.
