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Factory Orders Take A Hit

Orders to U.S. factories for big-ticket manufactured goods fell 2.3 percent in February, the largest decline in 10 months as demand fell sharply for transportation equipment including airplanes and industrial machinery.

The Commerce Department reported today that orders for durable goods, items expected to last at least three years, fell to a seasonally adjusted $208.4 billion last month.

That followed a 2.2 percent decline in January, larger than the government previously estimated.

February's decline was much larger than the 0.2 percent drop many analysts were predicting and marked the biggest decline in overall durable-goods orders since a 2.4 percent drop in April.

The Federal Reserve on Tuesday bumped up interest rates for the fifth time since June 30th to slow the speeding economy and keep inflation from becoming a problem. Given strong continuing growth, many analysts expect the Fed will boost rates again on the 16th.

In February, orders for transportation equipment fell by a sharp 8.7 percent, the biggest decrease since April. Orders for airplanes and aircraft parts posted the largest declines. In January, transportation orders fell by 7.2 percent.

Excluding the volatile transportation category, overall durable-goods orders fell by 0.2 percent in February, the second straight monthly decline. Transportation is often volatile from month-to-month, because it includes such big purchases as airplanes.

Orders for industrial machinery, including computers and machine tools, fell 4.6 percent February, following a 10 percent rise the month before.

Primary metals, the category that includes steel, saw orders fall by 2.4 percent last month, following a 4.6 percent increase in January.

However, for electronics and electrical equipment, including semiconductors, circuit boards and home appliances, orders rose by 6.4 percent in February after a 10.1 percent drop.

While on the rebound, American manufacturers have been battered by a global financial crisis that has cut sharply into their overseas sales and also has opened them up to stiffer competition for cheap imports.

Shipments of big-ticket goods, a good sign of current demand, fell 1.8 percent in February, following a 1.5 percent rise the month before.

There was little immediate reaction in the inflation-sensitive market for government bonds, where yields on 30-year Treasurys hovered around Thursday night's 5.91 percent, a seven-month low.

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