Factory orders drop more than expected

WASHINGTON - 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. The report was further evidence of the severity of the recession.

The Commerce Department's reported decrease 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 records 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 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.

The government reported Wednesday that the overall economy, as measured by the gross domestic product, contracted at an annual rate of 6.1 percent in the first quarter following a 6.3 percent plunge in the fourth quarter of last year. That was the sharpest GDP setback over consecutive quarters in more than a half-century.

Auto companies have been particularly hammered. Chrysler LLC filed for bankruptcy protection Thursday, announcing that it would temporarily halt most of its vehicle production while completing a deal with Italian carmaker Fiat.

Other manufacturing companies also are enduring hard times.

Dow Chemical, based in Midland, Mich., on Thursday reported a 97 percent drop in its first-quarter profit as its big commercial customers cut back on purchases, though the results beat Wall Street's expectations. Because Dow's chemicals are used in everything from toys to automobiles, the global economic downturn has hit the company especially hard.

Consumer goods manufacturer Colgate-Palmolive Co. said this week that higher prices and cost-cutting helped its first-quarter profit jump 9 percent despite being buffeted by a stronger dollar and a drop in European sales.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.