US factory orders drop adds to slowdown concern

Employee Mike Flynn installs air coolers on a stand in the subassembly area at the Ellicott Dredges LLC manufacturing facility in Baltimore, Maryland.
Andrew Harrer | Bloomberg | Getty Images

New orders for U.S. factory goods fell more than expected in January and shipments also slipped, adding to signs of a recent slowdown in manufacturing activity.

The Commerce Department said on Thursday new orders for manufactured goods declined 0.7 percent. December's orders were revised to show a 2.0 percent drop instead of the previously reported 1.5 percent fall.

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Economists polled by Reuters had forecast new orders received by factories slipping 0.4 percent. Shipments of new orders fell for a second month in January.

Factory activity is cooling as businesses place fewer orders while working through stocks of unsold goods. Unseasonably cold weather, which has weighed on activity ranging from home building to hiring, is also a drag on manufacturing.

Factory orders fell across most categories, with big declines in transportation, primary metals and electrical equipment, appliances and components. Orders for machinery also fell.

Orders excluding the volatile transportation category rose 0.2 percent, reflecting gains in defense capital goods and in computers and electronic products.

The department also said orders for durable goods, manufactured products expected to last three years or more, fell 1.0 percent as reported last month. Durable goods orders excluding transportation were up 1.1 percent as previously reported.

Orders for non-defense capital goods excluding aircraft—seen as a measure of business confidence and spending plans—increased 1.5 percent rather than the previously reported 1.7 percent advance.