February orders to factories for big-ticket durable goods such as aircraft and washing machines recorded the sharpest decline in more than seven years, reflecting weakness across many industries.
Orders slumped 5 percent to a seasonally adjusted $191.8 billion in the worst decrease since December 1991, when the economy was just starting its eight-year recovery from the 1990-91 recession.
The drop, however, followed significant gains of 3.3 percent in January and 3.4 percent in December and left orders still above the November level, the Commerce Department said Wednesday.
The world economic slump that began in Asia nearly two years ago has hurt American manufacturers by slicing their export sales and forcing them to compete at home against low-priced imports.
They've cut more than 300,000 jobs over the past year, but many have seen business hold up fairly well because U.S. consumers continue to spend strongly.
Consumer demand is crucial to sustaining U.S. economic growth, but, in a sign of modest strain, the delinquency rates for both credit cards and other consumer loans increased during the final three months of last year, the American Bankers Association said Wednesday.
A huge swing in civilian aircraft orders, up from $4.9 billion to $11.5 billion in January and down to $7.9 billion in February, largely, but not entirely, explains February's decline in orders for durable goods, expensive items expected to last at least three years.
Orders excluding the volatile aircraft industry, where the timing of a handful of orders can distort the trend, fell 3.4 percent in February after a 0.2 percent drop in January.
The one bright spot in February, orders for primary metals such as steel, jumped 7.2 percent last month. But every other category posted declines.
Orders plunged 37.9 percent for military goods, 8.5 percent for electronic and other electric equipment, 9.4 percent for transportation equipment other than aircraft, 8.5 percent for electronic and electrical equipment and 0.4 percent for industrial machinery.
Written By Dave Skidmore, Associated Press Writer