Factory Orders Fall 0.9%, Led by Slack Demand for Aircraft

American factory orders fell sharply in February, pulled down by a large decline in demand for aircraft, but the prospects for American workers remained bright through March.

The 0.9% drop in factory orders, slightly more than expected by economists, followed a 0.6% increase in January and brought orders to a seasonally adjusted $334.8 billion, the Commerce Department said Thursday.

Excluding the volatile transportation sector, factory orders inched 0.2% higher in February.

U.S. manufacturers--particularly the export-reliant aircraft industry--have been hurt by slack demand in Asian countries undergoing financial turmoil. However, the weakness hasn’t rippled through the U.S. economy generally.

The number of applications filed at state offices for unemployment benefits fell by 5,000 to a seasonally adjusted 309,000 last week from the previous week, the Labor Department said. The level signals strong demand for labor.

A four-week average of benefit claims, which smooths weekly fluctuations, rose 1,000 to 308,250. It was the average’s eighth consecutive week below 310,000, the longest such stretch in 10 years.

Fueled by buoyant economic news, the Dow Jones industrial average rose 118.32 points, or 1.3%, to a record 8986.64, resuming its assault on the 9,000 mark.

Federal Reserve policymakers, in the minutes of their Feb. 3-4 meeting, released Thursday, cited “increasingly tight labor markets” as an inflationary threat. But they voted 12 to 0 to hold short-term interest rates steady, because the dampening impact of Asia’s economic troubles on the United States “clearly seemed likely to become more pronounced in coming months.”

Factory orders for durable goods--big-ticket items expected to last three or more years--fell 1.1% in February. That’s an improvement over an initial estimate last week of a 1.7% drop.

That encompassed a 7.8% drop in transportation equipment. A 32.8% plunge in aircraft orders more than offset a 4.2% increase for autos and parts.

Orders for industrial machinery and equipment rose 2.8% to $36.41 billion, on top of a 2.3% gain in January, while February orders for fabricated metal products grew 2.2% to $19.89 billion, following a 0.7% increase.

Orders for electronic equipment and for medical and other types of instruments also fell. But orders increased for stone, clay and glass products, primary metals such as steel, fabricated metal products and industrial machinery.