US factory orders fall on decline in aircraft

8:39 am | October 5, 2012

WASHINGTON (AP) — Orders to U.S. factories fell in August from July, mostly because of a sharp drop in volatile aircraft orders. The decline offset an increase in orders that reflect corporate investment plans.

The Commerce Department said Thursday that factory orders dropped 5.2 percent in August, the biggest decline in more than three years. The loss was largely because demand for commercial aircraft plunged 102 percent. That pulled down orders for long-lasting manufactured goods by 13.2 percent.

In one positive sign, orders for business equipment and software, often considered a proxy for investment plans, rose 1.1 percent, after two steep declines. Still, orders for steel, electrical equipment, and industrial machinery all fell.

Orders for non-durable goods, which include food, clothing, and gas, rose 2.2 percent. The increase mostly reflected higher gas prices.

Manufacturing, which helped pulled the economy out of the Great Recession, has weakened since the spring, along with the broader economy. Slower global growth has hurt demand for American exports, while U.S. consumers and businesses have been cautious about spending.

Steven Wood, chief economist with Insight Economics, said manufacturing and capital spending are likely to stay sluggish, at least for a few more months.

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