The Commerce Department reported Wednesday that orders to factories for “big ticket” durable goods declined for the second straight month in February, another sign that the economy is slowing.
The orders for U.S. factory-made goods--items ranging from kitchen appliances to tanks that are designed to last at least three years-- fell 3.6% in February to a seasonally adjusted $123.68 billion after dropping 2.9% in January, the first back-to-back declines in three years and the steepest drops since a 7.4% dive last July.
The level of orders, which was below Wall Street’s expectations, reflected smaller bookings for most major big ticket sectors, especially cars, aircraft and steel.
“I think this is further evidence that the economy is indeed starting to slow down,” said economist David Wyss of Data Resources Inc. in Lexington, Mass.
The decline in orders, coupled with other government reports showing slower economic activity last month, “suggests that the Federal Reserve’s tightening has done its job,” Wyss said.
The central bank for a year has been tightening credit in an effort to slow the economy to a more sustainable pace and rein in inflation, which has been on the rise in recent months.
Earlier government reports on economic activity in February detailed persistent inflation but also recorded a drop in retail sales, a decline in factory operating rates, flat industrial production and a sharp drop in housing construction.
“The reports we get from manufacturers are that high interest rates and a slowdown in export growth are causing their order picture to taper off,” said Jerry Jasinowski, chief economist for the National Assn. of Manufacturers.
Jasinowski said that while the economy is slowing somewhat, “there’s still pretty solid growth out there.”
Orders for durable goods were down in nearly all major industries last month, with most of the decline blamed on an 8.5% drop in demand for transportation equipment, mainly autos and aircraft.
Excluding transportation, orders in all other categories were down 1.7% last month after falling 0.4% in January.
The weakness occurred despite a 20.1% surge in defense orders, a category subject to wide swings depending on when big contracts are signed. Excluding defense, all other orders were down 4.9% in February, the biggest decline since a 5.7% drop in January, 1987.