Factory orders drop more than expected
Orders to U.S. factories fell more than forecast in February, as companies scaled back investment plans on concern the economy was already in a recession.
The 1.3% decrease followed a 2.3% decline in January, the Commerce Department said Wednesday. Excluding orders for transportation equipment, which tend to be volatile, demand fell 1.8%, the largest decline since January 2007.
Meantime, bankruptcy filings by U.S. consumers in the first three months of this year soared 27% from the year-ago period as households grappled with growing debt and mortgage problems, the American Bankruptcy Institute said Wednesday.
In March, consumer bankruptcy filings totaled 86,165. That marked a steady increase from 76,120 filings in February and 66,050 recorded in January, the nonpartisan bankruptcy research group said.
“Bankruptcies are rising due to the heavy burden of household debt and growing mortgage problems,” said Samuel Gerdano, ABI executive director. “We expect this trend to continue through 2008.”
A compromise bill in Congress on Wednesday to help struggling homeowners refinance their mortgages did not include a controversial measure to let bankruptcy judges cut the interest rate and other terms for some borrowers unable to afford their current mortgage.
That provision is opposed by Republicans and the banking industry.
The cutback in factory orders follows the biggest housing slump in a generation and record energy prices constraining consumer spending. The figures indicate the Federal Reserve’s bid to loosen the credit squeeze by lowering the benchmark interest rate and pumping money into financial markets had yet to boost confidence.
“Business investment spending is likely to be weaker than we had thought earlier,” said Dana Saporta, an economist at Dresdner Kleinwort in New York. “This is likely to have an adverse effect on the growth of employment and income.”
A separate survey showed companies unexpectedly added workers in March. The increase of 8,000 jobs followed a revised drop of 18,000 the previous month, according to the report from ADP Employer Services.
