Factory Orders Plunge 9 Percent, the Largest Decline in Three Months

Orders to factories for big-ticket manufactured goods plunged in January by the largest amount in three months with the weakness led by a huge drop in demand for commercial airplanes.

The Commerce Department reported Tuesday that orders fell 7.8 percent in January compared to December. It was the biggest one-month drop since an 8.1 percent plunge in October and was far larger than Wall Street had been expecting.

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The decline was led by an 18 percent plunge in transportation orders, reflecting a big decline in orders for commercial jetliners and continued weakness in auto manufacturing. But there were widespread decreases in a number of other industries as manufacturing continued to be affected by an overall economic slowdown.

Demand for commercial aircraft fell by 60.3 percent after having soared by 31.3 percent the previous month. This reflected the fact that Boeing Co. (BA) took orders for just 13 planes in January after having seen orders soar to 212 in December. Aircraft orders are extremely volatile from month to month.

But there also was weakness in a number of other areas, with demand for motor vehicles and parts falling by 5.1 percent. The auto sector has been particularly hard hit as American car manufacturers are struggling to compete with foreign rivals.

Manufacturing overall has experienced weakness in recent months, reflecting a slowing economy being held back by a sharp turndown in the once-booming housing sector.

Demand for non-defense capital goods orders fell by a record 19.9 percent in January. This category is closely watched for signals it can send about the plans businesses have to expand and modernize their operations. Business investment has been slowing in recent months.

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