Factory Orders Drop 1.4% on Defense Falloff

A 1.4% decline in orders to U.S. factories for manufactured goods in August marked the biggest decline in five months, the government reported today.

In another report, it said that spending for construction projects shot up 1.1% in August to a seasonally adjusted annual rate of $382.2 billion, the strongest increase since a 1.6% advance in April.

A 26.6% plunge in orders for defense goods was mainly responsible for the decline in factory orders. This volatile category had risen 40% in July.

Without that big drop, total factory orders would have been unchanged in August following a 0.1% decline, excluding defense, in July, the Commerce Department said.

It said orders totaled $191.8 billion on a seasonally adjusted basis in August, $2.8 billion lower than the July total.

The big drop in factory orders included a 3.4% decline in orders for durable goods, items expected to last three or more years, and a 0.6% increase in orders for non-durable goods.

The decline in durable goods orders was more severe than estimated in an advance report which had put the decline at a smaller 2.6%.

The strength in August construction spending came from gains in single-family homes and non-residential buildings. These increases offset a drop in construction of apartment buildings, the government said.