April 25, 2012 at 8:41 AM ET
New orders for manufactured goods took the largest drop in three years last month, in a worrisome sign for manufacturing, which has been one of the economy's bright spots.
The Commerce Department said Wednesday that durable goods orders tumbled 4.2 percent in March to $202.6 billion. It was the second decrease in the past three months. Orders rose by 1.9 percent in February.
A large drop in demand for commercial aircraft took a big chunk out of duable goods orders: excluding transportation, orders decreased 1.1 percent. Minus defense, new orders dropped 4.6 percent.
Economists had forecast orders for durable goods, which range from toasters to aircraft, falling 1.7 percent after a previously reported 2.4 percent rise in February.
The report added to signs that manufacturing exited the first quarter with less momentum. Data last week showed industrial production was flat in March for a second straight month, while some gauges of regional factory activity weakened in April.
"If you look at it from a momentum perspective, this adds to the evidence that momentum in the economy sort of fell flat in March. You had the first two months coming in with a lot of upward surprises, then the data started to become more mixed and many of the indicators in March came in to the downside," said Ellen Zentner, senior U.S. economist for Nomura Securities.
Manufacturing has been one of the main sources of economic growth, but is slowing as euro zone economies slide into recession and China cools.
The plunge in orders for transportation equipment reflected a 47.6 percent drop in bookings for civilian aircraft. Boeing received only 53 orders for aircraft, according to the plane maker's website, down from 237 in February.
Orders for motor vehicles barely rose last month.
Adding to the report's weak tenor, non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 0.8 percent after an upwardly revised 2.8 percent rise the prior month.
Economists had expected this category to rise 0.9 percent after a previously reported 1.7 percent increase.
But shipments of non-defense capital goods orders excluding aircraft, which go into the calculation of gross domestic product, rose 2.6 percent after increasing 1.4 percent in February.
This suggests that growth in business investment in capital goods increased in the first quarter, but probably not as much as in previous periods.
Reuters contributed to this report.
© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.