U.S. Factory Orders Down 0.9 Percent

Orders to U.S. factories fell a larger-than-expected 0.9 percent in March, while factory shipments dropped for a record eighth consecutive month. However, an industry index for April showed that U.S. manufacturing activity contracted at a slower-than-expected pace last month.

The Commerce Department's reported decrease in factory orders for March exceeded the 0.6 percent fall that economists had predicted. Shipments of manufactured products tumbled 1.2 percent, an eighth consecutive decline. It marked the longest such stretch of declines on record dating to 1992.

American manufacturers have been battered by the prolonged recession in the United States and by spreading weakness overseas that has sharply reduced their foreign sales.

Adding to the picture of weakness in March, the government report Friday sharply revised the February increase, to show a smaller 0.7 percent rise rather than the 1.8 percent gain originally reported.

For March, orders for durable goods dropped 0.8 percent as strength in demand for commercial jetliners and military aircraft offset weakness in other areas. Orders for nondurable goods, products such as petroleum, chemicals and paper, dropped 1 percent after a 0.2 percent fall in February.

The weakness in nondurable goods reflected declines in demand for textile goods, clothing, paper and chemicals. They were partly offset by a rise in demand for petroleum — an increase that most likely reflected higher prices more than a boost in demand.

Economists said the best that can be expected now is for the industrial sector to stabilize at lower levels given the severity of the downturn in the United States and worldwide.

In a separate report, the Institute for Supply Management, a trade group of purchasing executives, said Friday its manufacturing index rose to 40.1 in April from 36.3 in March. A reading below 50 indicates a contraction. It was the 15th consecutive month of contraction in the manufacturing sector.

Wall Street economists had expected the index to rise to 38 in April, according to a survey by Thomson Reuters.

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