New orders received by U.S. factories plummeted for a third straight month in October, according to data on Thursday that underlined the drop in manufacturing output as the economy grinds through a recession.
Overall factory orders plunged 5.1 percent to a seasonally adjusted $407 billion, according to a Commerce Department report. That was the biggest drop since July 2000 and more than the 4.0 percent decline that Wall Street economists had forecast. It followed a revised 3.1 percent drop in September that was previously reported as 2.5 percent.
"It just continues the string of weaker than expected data ... (and) reinforces the overall picture of the slowing in the U.S. economy led by the manufacturing sector," said Brian Dolan, chief currency strategist for Forex.com in Bedminster, New Jersey.
The picture was not much brighter when transportation orders were excluded, with orders down 4.2 percent in October after a record 4.3 percent drop in September.
New orders for consumer goods fell 5.0 percent in October, as shoppers tightened their belts in the face of grim economic news. Orders for motor vehicles and parts fell 4.5 percent, following a big slump in sales.
Economists said the manufacturing output decline reflected weak demand both at home and abroad.
"Basically we went from an ability to export with a vengeance to a rapid decline. Consumer and business investments are very weak. We are in recession and this confirms that," said Kurt Karl, chief U.S. economist at Swiss Re in New York.
U.S. equity indexes were little changed after the data, while the dollar held on to gains versus the euro. Longer-dated U.S. Treasuries also held on to their gains.
"I think the market has done a good job shrugging things off for the past week or so. (But) eventually the market will react and you will see the market pull back some. I think we'll test the lows again -- I don't know when that is," said Warren Simpson, managing director at Stephen's Capital Management in Little Rock, Arkansas.