BUSINESS

Orders for long-lasting manufactured goods drop 4.2 per cent, most in 3 years

04/25/2012 09:08 EDT | Updated 06/25/2012 05:12 EDT
WASHINGTON - Orders for long-lasting factory goods fell by the largest amount in three years last month, mostly because demand for commercial aircraft plummeted. But companies also ordered less machinery and other equipment, a sign manufacturing output may slow.

Orders for durable goods dropped 4.2 per cent in March, the steepest fall since January 2009, the Commerce Department said Wednesday. Commercial aircraft orders, a volatile category, fell by nearly 50 per cent.

Excluding transportation equipment, orders declined 1.1 per cent. That's the second drop in that category in three months.

And orders for so-called "core" capital goods, a good measure of business investment plans, declined 0.8 per cent. Companies are reducing their orders for steel and other metals, industrial machinery and computers.

A durable good is expected to last at least three years. Examples range from appliances and cars to heavy machinery and planes.

Manufacturing has been a leading source of growth and jobs since the recession ended. Americans have stepped up their purchases of autos and electronic goods this year. Businesses have invested in more industrial machinery, computers and other equipment.

Both trends have kept factories humming, but there have been some hints that the sector could slow.

Factory output fell in March, the Federal Reserve said last week. Companies made fewer electronic products and cut back on steel and other metals.

And a private survey showed that the manufacturing sector expanded last month and companies said they were adding more jobs. Order backlogs also grew.

Americans are still spending, despite recent increases in gas prices. Retail sales rose at a healthy pace in March, the government said last week, boosted in part by unseasonably warm weather. Consumers also bought more furniture, cars, and other durable goods.