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Durable-goods orders drop for second month

/ Source: The Associated Press

Orders to factories for big-ticket manufactured goods fell for a second straight month in February, a worse-than-expected performance that provided more evidence of the economic troubles gripping the country.

The Commerce Department reported Wednesday that demand for durable goods dropped 1.7 percent last month, disappointing analysts who had been expecting a small rebound after a 4.7 percent decline in orders in January.

The declines showed up in a number of areas. Demand for manufacturing equipment plunged by 13.3 percent, the largest amount on record, while the category that is seen as a good proxy for business investment fell by 2.6 percent, the biggest decline in four months.

The problems in manufacturing are a reflection of weakness in the overall economy as the country struggles with a prolonged slump in housing, a severe credit crunch, soaring energy prices and higher unemployment.

Economic growth slowed to a barely discernible 0.6 percent in the final three months of last year, and many economists believe the gross domestic product will turn negative in the current quarter, signaling the start of a recession.

The 1.7 percent drop in orders for durable goods, items expected to last at least three years, was worse than the 1 percent increase that many economists had expected.

The weakness came even though orders for transportation equipment rebounded with a 0.6 percent rise in February after a big 12.6 percent plunge in January. The swing in both months reflected changes in demand for commercial aircraft, which rose 5.4 percent in February following a 30.2 percent plunge in January. Orders for motor vehicles fell by 2.7 percent in February as U.S. automakers continued to face weak demand, reflecting the weak economy and soaring energy prices.

Excluding transportation, orders fell by 2.6 percent in February, representing the fourth decline in the past five months.

Economists believe that if the country does slip into a recession, the downturn may not be as severe in manufacturing, which is being helped by continued strong growth overseas, which is bolstering U.S. exports.