Factory Orders, Housing Weaken

New orders at U.S. factories in January posted their largest drop since 2000 as aircraft orders fell, while pending sales of U.S. homes slipped as the housing market slowed, reports showed Monday.

Factory orders fell 4.5% in January, slightly less than expected but still the biggest drop since July 2000, as orders for durables, machinery, computers, and aircraft declined, Commerce Department data indicated.

Analysts polled by the Reuters news service were expecting factory orders to fall 5.3%.

Orders for durable goods, expensive items meant to last three years or more, fell 9.9%, the steepest decline since a 14.2% drop in July 2000. However, the decline in durables was revised upward from a 10.2% drop reported Feb. 24.

Factory orders for December were revised up to a 1.6% rise from an initially reported 1.1% gain.

Transportation equipment tumbled 31% as orders for non-defense aircraft and parts plummeted 68.3%. Civilian aircraft orders had slipped 2.8% in December, but that followed a 139.4% surge in November.

With transportation stripped out, factory orders were up 1.6% in January, the third consecutive monthly increase. When defense orders were omitted, factory orders fell 3.3%, the first decline in four months and the biggest since September 2001.

Non-defense capital goods excluding aircraft, a proxy for business spending, ticked up 0.1%.

A separate report indicated that pending sales of U.S. homes slipped in January, according to trade group data, extending a months-long slide as the housing market shows signs of moderation after a five-year rally.

The Pending Home Sales Index, based on contracts signed in January, stood at 116.3, down 1.1% from December and 4.8% below a year earlier, the National Assn. of Realtors said. December’s index was revised up to 117.6 from an originally reported 116.4.

“This is consistent with the continued downtrend in housing demand,” said Jim O’Sullivan, a senior economist for UBS Securities in Stamford, Conn.

The Pending Home Sales Index has steadily declined since hitting a record 128.2 in August.