updated 2/26/2009 11:24:18 AM ET 2009-02-26T16:24:18

Manufacturers saw orders for big-ticket goods plunge by a bigger-than-expected 5.2 percent in January as global economic troubles cut into demand from customers both in the United States and abroad.

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The latest report on U.S. factory activity, released by the Commerce Department on Thursday, showed that orders had fallen for a record six straight months. The previous record — a four-month-stretch of declines — came in 1992.

The weakness in January was broadly based with orders for autos, metal products, machinery, computers and electrical equipment and household appliances all posting declines.

Not only was January’s drop steeper than the 2.5 percent decline analysts were expecting, but activity in December turned out to be much weaker. Updated figures now show a 4.6 percent drop in orders, versus a 3 percent decline previously estimated.

Manufacturers have trimmed production and payrolls as they race to cut costs to survive the economic fallout. The collapse of the U.S. housing market has especially crimped demand for all kinds of building materials and equipment, as well as a range of consumer goods, including furniture, carpet and household appliances.

Consumers at home and abroad are cutting back, which is hurting U.S. manufacturers.

The department’s report showed that orders for autos dropped 6.4 percent in January, from the previous month. Orders for primary metals — a category that includes steel — fell 4.6 percent. Demand for fabricated metal products declined 1.1 percent.

Machinery orders went down 2 percent. Orders for computers and related products plunged 16 percent. Orders for electrical equipment, household appliances and other components fell 6.1 percent.

Stripping out volatile transportation orders, which can bounce around a lot from month to month, all other orders sank 2.5 percent in January, also the sixth straight monthly decline.

The rough economic environment has especially hurt U.S. automakers. Pushed to the financial edge, Detroit’s General Motors Corp. and Chrysler LLC are restructuring operations in hopes of securing billions more in federal aid.

The current January-to-March quarter is shaping up to be another very feeble period for the economy. When the government releases its updated figure for the economy’s performance at the end of last year, it is expected to be much worse. Analysts are now predicting the economy contracted at a staggering pace of 5.4 percent in the final three months of last year. That would be weaker than the 3.8 percent annualized drop estimated a month ago.

More on   Retail sales   |  the economy

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