Durable Goods Orders Drop 1.8 Percent

Factories saw orders for big-ticket goods drop by 1.8 percent in January, but much of that reflected huge declines in bookings for commercial and military airplanes.

The overall figure, released by the Commerce Department (search) Thursday, obscured gains in other areas as the nation's manufacturers work to keep their recovery moving along.

The 1.8 percent decrease in orders for "durable" goods — costly manufactured products (search) expected to last at least three years — came after a revised 1.6 percent gain registered in December, which was better than previously estimated.

Although economists were forecasting a 1.4 percent rise in new bookings in January, the decline actually appeared to overstate the weakness.

Excluding orders for transportation equipment such as airplanes and cars, which tend to swing widely from month to month, all other durable goods orders increased by a solid 2 percent in January. That was up from a 1.7 percent advance in December — and the biggest rise since October.

Orders for primary metals, including steel, fabricated metal products, electrical equipment and appliances, and communications equipment, all posted sizable gains in orders in January.

However, orders for commercial and military aircraft plunged by 27.9 percent and 34 percent, respectively, swamping the gains reported for other big-ticket goods.

Other economic reports on manufacturing suggest that activity is improving. However, many plants continue to operate below capacity. Economists are hopeful that businesses will ramp up capital spending this year and invest more in rebuilding inventories, factors that would help manufacturers and spur growth.

Even so, factory employment, which has lost millions of jobs over the last three years, probably will remain a sore spot, economists say.