Orders to factories for big-ticket manufactured goods fell for a third straight month in March, the longest string of declines since the 2001 recession.
The Commerce Department said Thursday that demand for durable goods dropped by 0.3 percent last month, a worse-than-expected performance that underscored the problems manufacturers are facing from a severe economic slowdown. The last time orders fell for three consecutive months was from February to April of 2001, when the country was sliding into the last recession.
President Bush on Tuesday said the economy was not in a recession but a period of slower growth. However, economists who believe the country has fallen into a recession will point to the string of declines in manufacturing orders to support their view.
In other economic news, newly laid off workers filing claims for unemployment benefits posted a sharp decline last week.
The Labor Department reported Thursday that claims for unemployment benefits fell by 33,000 last week to 342,000. Economists had been expecting that claims would rise by 3,000. The four-week moving average for claims fell by 7,250 to 369,500.
Even with the improvements, analysts are still worried that the weak economy is putting greater pressures on the labor market. The unemployment rate climbed to 5.1 percent in March as businesses laid off the largest number of workers in five years.
The weakness in manufacturing orders was led by a 4.6 percent drop in orders for autos, a sector that has been hard hit by soaring gasoline prices and the weakening economy, which have cut sharply into car sales. Orders in the category that includes home appliances fell by 6.6 percent. This industry has been hurt by the two-year slump in home sales.
Economic growth slowed to a near-standstill at the end of last year as the economy was battered by the prolonged slump in housing and a severe credit crunch that has resulted in billions of dollars of losses at many of the nation’s largest financial institutions and has made it harder for consumers and businesses to get loans.
Consumer sentiment has plunged to recessionary lows as Americans have also watched gasoline prices soar to an average price above $3.50 per gallon nationally.
The 0.3 percent drop in orders for durable goods, items expected to last at least three years, followed even bigger declines of 0.9 percent in February and 4.4 percent in January.
Orders for all transportation products fell by 4.6 percent, reflecting the big drop in demand for autos. Orders for commercial aircraft actually rose by 5.5 percent while demand for defense aircraft surged by 29.4 percent. Many defense industries have seen big increases reflecting the wars in Iraq and Afghanistan.
A key category that is viewed as a proxy for business investment plans showed no increase in March after a big 2 percent drop in February. Businesses have cut back on their plans to expand and modernize as the economy has softened.