Manufactured Durable Goods Orders Decline 2.8% in March

New orders in March for big-ticket manufactured goods -- including such items as jet fighters and automobiles -- took their steepest drop in nearly three years, according to a government report Wednesday that heightened concerns that economic growth was slowing.

New orders for manufactured durable goods -- items meant to last at least three years -- fell 2.8% in March from the previous month to $194 billion, according to the Commerce Department. That was the third consecutive monthly drop and the largest since September 2002. Economists had been expecting a rise of 0.3%.

Excluding the volatile transportation category, orders for durable goods sank 1%, the Commerce Department said. Expectations were for a gain of 0.5%, excluding transportation.

“This adds to the evidence that the economy has hit a ‘soft patch,’ ” said Steven Wood, chief economist at Insight Economics in Danville, Calif.

The report also raised worries that the slowdown was spreading from consumer spending to business outlays. Other recent reports had shown weakness in retail sales and consumer confidence, suggesting that people were pulling back on spending.

As a result, some economists revised downward their estimates for first-quarter economic growth. The government’s initial estimate of that rate will be released this morning.

“The combination of higher energy costs and a still very difficult pricing environment has probably spurred companies to cut back spending wherever possible, which could also be weighing on capital investment at the moment,” economist Joshua Shapiro said in a research note for consulting firm MFR Inc.

The declines hit a wide variety of categories, including machinery, down 7.6%; motor vehicles and parts, down 2.4%; and military aircraft and parts, which tumbled more than 35%.

Some analysts said the expiration of tax credits at the end of last year might have encouraged companies to place orders earlier than normal, depressing orders this year as a result.

A separate report Wednesday showed that the long-running U.S. housing boom gaining fresh energy from low interest rates on loans.

Applications for U.S. home mortgages increased last week as both refinancing and purchasing activity climbed in response to lower interest rates in April, according to a Mortgage Bankers Assn. report.

Refinancing activity was at its highest rate since March, the trade group said.

Reuters was used in compiling this report.