New orders received by U.S. factories dropped 0.9 percent to a seasonally adjusted $420 billion in October, a setback for the manufacturing sector as demand declined across a broad array of goods, a government report on Friday showed.
The Commerce Department said October's decline followed an upwardly revised 3 percent gain in September orders while August orders were flat. Economists surveyed by Reuters had predicted a slightly steeper 1 percent fall in October orders.
Orders for transportation equipment fell 5.2 percent after a 16.5 percent September jump and orders were also lower in October for primary metals, machinery, computers and electrical equipment.
Excluding transportation, which is a major component of the sector, October factory orders were down 0.2 percent after a 1.3 percent September rise.
There were hopes that a weaker U.S. dollar and improving global demand would allow the manufacturing sector to play a leading role in fueling global recovery and offset any impact from Europe's debt crisis.
But another key category in the report -- nondefense capital goods orders excluding aircraft -- also posted a 4.3 percent drop in October, an indication that businesses remain wary about investing in new production equipment.
(Reporting by Glenn Somerville; Editing by Andrea Ricci))