U.S. Factory Orders Fall 2.3% in March; Biggest Drop in 2 Years

Orders to U.S. factories for manufactured goods fell 2.3% in March, with civilian demand declining at the steepest rate in almost six years, the Commerce Department said Wednesday.

The department said new orders on a seasonally adjusted basis fell to $194.17 billion in March following a 1.3% drop in February. The March decline was the biggest since a 3.3% decrease in April, 1984.

The decline would have been even larger without a huge surge in orders for defense products, which rose 45.1% last month because of large shipbuilding contracts.

Excluding defense, total orders would have fallen by 4.1%, the steepest decline since May, 1980.

The report on factory orders provided further evidence that U.S. manufacturers have yet to see much relief from foreign competition.

“The orders report corroborates what the trade picture is showing. The manufacturing sector in the United States has not turned around yet, in large part because of trade,” said David Berson, senior economist at Merrill Lynch in New York. He said weakness in manufacturing was likely to hold back overall growth until midyear.

The economy, as measured by the gross national product, was expanding at an annual rate of 3.2% in the first three months of this year. But Berson said growth will slump to a 2% rate in the current April-to-June quarter before rebounding in the second half of the year.

The report on factory orders said demand for durable goods--items expected to last three or more years--fell 2.1% in March following a 0.6% drop in February. The March number was revised from an advance report last week that put the decline at a sharper 2.5%.