According to a new report by the U.S. Department of Commerce
[PDF], new orders for manufactured durable goods decreased $8.8 billion or 4.2 percent to $202.6 billion in March.
Forboding signs of further economic decline could sway voters
during the election cycle that culminates in November.
The manufacturing sector output is down two of the last three months, following a modest 1.9 percent February increase. Excluding transportation, new orders decreased 1.1 percent and excluding defense, new orders decreased 4.6 percent.
The drop in demand for long-lasting manufactured goods was the largest plunge in 3 years, according to a Rueters article
published Wednesday. The pull back in an already anemic manufacturing recovery suggests the economy slowed significantly as the first quarter ended.
Orders for durable goods orders plunged 4.2 percent, the largest slump since January 2009 when the economy was in free fall, Commerce Department data showed on Wednesday. Economists had expected a drop of just 1.7 percent.
Original figures for February showing orders increased 2.4 percent were later revised downward to an anemic 1.9 percent increase.
"This adds to the evidence that momentum in the economy sort of fell flat in March," said Ellen Zentner, a senior U.S. economist at Nomura Securities in New York.
Matching weakness in factory production, U.S. jobs growth slowed sharply last month as consumer confidence declined.
Adding to a troubled economic outlook, while industrial production was flat in March for a second straight month, some gauges of regional factory activity also show weakening in April.
On a positive note, shipments of non-defense, non-aircraft capital goods orders, which go into the calculation of gross domestic product, rose 2.6 percent after increasing 1.4 percent in February.
Analysts expect an economic report due out on Friday will show that GDP grew at a 2.5 percent annual rate in the first quarter after expanding at a 3 percent pace in the fourth quarter; such reports are often revised downward after more data becomes available.
"Unexpected weakness in core orders in March suggests less growth of equipment and software spending in the second quarter, and more first-quarter inventory investment suggests a larger decline in inventory investment in the second quarter," said Ben Herzon, an economist at Macroeconomic Advisers in St. Louis.
The decrease in orders for durable goods coupled with an expected rise in inventories during the first quarter may signal an economic downturn through the middle of the year.