Factory orders in October drop 5.1%, the sharpest fall in 8 years

Orders to U.S. factories plunged in October by the sharpest amount in more than eight years as a deepening recession caused big cutbacks in demand for steel, autos, computers and heavy machinery.

Analysts expect that the weakness will continue for some time.

The Commerce Department reported Thursday that factory orders dropped 5.1% in October, the largest decrease since an 8.5% fall in July 2000.

It was larger than the 4% drop economists had been expecting.

They believe manufacturing will continue to be under pressure for many more months, reflecting a deepening recession that already is the longest slump in a quarter-century.

The drop in orders marked the third consecutive decline, with demand for both durable goods and nondurable goods falling.

Demand for non-military capital goods, considered a good proxy for business investment plans, fell 5% in October, the biggest decline since January and the fourth straight monthly decrease.

With the economy weakening, businesses are cutting back on their plans to expand and modernize, further hampering overall growth.

Orders for durable goods, items expected to last at least three years, fell 6.9%, even bigger than the 6.2% initial estimate the department made last week.

Orders for nondurable goods, such as food, clothing, paper goods and petroleum products, dropped 3.4%, partially reflecting the big declines occurring in energy prices.

The weakness was led by a big 11.2% decline in demand for transportation equipment.

Demand for autos fell 2.8% and commercial aircraft orders were down 4.8%.