The economy is showing fresh signs of slowing, while a key inflation measure was stronger than expected, according to the latest data.
New orders at U.S. factories tumbled by a greater-than-expected 5.6% in January, the biggest decline in more than six years, on a big drop in aircraft orders, a Commerce Department report showed.
Meanwhile, business productivity growth was revised down sharply for the fourth quarter to an annualized 1.6% pace. The slippage in productivity sent unit labor costs up at a 6.6% annualized rate in the quarter.
Unit labor costs are a gauge of inflation and profit pressures that are watched closely by the Federal Reserve. The combination of lower productivity and higher wages, if sustained, would raise alarm bells at the Fed about inflation.