New orders for U.S. factory goods fell in January as demand for transportation equipment weakened, but the underlying strength in manufacturing remained intact.
The Commerce Department said orders for manufactured goods dropped 2.0 percent. Economists polled by Reuters had forecast orders falling 2.2 percent after a previously reported 1.8 percent increase in December.
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Factory orders were weighed down by a 19.8 percent plunge in transportation equipment as bookings for defense aircraft and parts tumbled.
Orders excluding the volatile transportation category increased 1.3 percent, pointing to underlying strength in the sector that carried the economy out of the 2007-09 recession.
The Institute for Supply Management said last week strong orders pushed manufacturing activity to its highest level in more than 1-1/2 years in February.
The Commerce Department also said orders for durable goods, manufactured products expected to last three years or more, fell 4.9 percent instead of the 5.2 percent drop reported last week.
Durable goods orders excluding transportation were up 2.3 percent rather than 1.9 percent.
Orders for non-defense capital goods excluding aircraft — seen as a measure of business confidence and spending plans — increased 7.2 percent in January instead of the previously reported 6.3 percent surge.