Orders for long-lasting goods sank in March by the largest margin in three years, hurt by falling demand for commercial aircraft, the Commerce Department reported Wednesday.
Manufacturers' orders for goods designed to last at least three years fell 4.2 percent to a seasonally adjusted $202.6 billion, the biggest decrease since January 2009, the Commerce Department said. Economists had forecast a 1.7 percent decline after a previously reported 2.4 percent rise in February.
The decline stemmed primarily in bookings for transportation equipment, which plunged 12.5 percent over the month, the most since November 2010, reflecting a 47.6 percent drop in new orders for civilian aircraft. Orders at The Boeing Company (NYSE: BA) softened in March. The largest U.S. aircraft maker said it received orders for 53 planes last month, down from 237 in February.
Demand for non-defense capital-goods orders, excluding aircraft, considered a good proxy for business confidence, fell 0.8 percent after a revised 2.8 percent increase the prior month. The February gain was previously estimated at a smaller 1.7 percent.
Orders for motor vehicles and parts rose 0.1 percent after a 2 percent rise in the previous month. The relatively flat performance was somewhat unexpected as automakers posted strong March sales results, rising about 13 percent as consumers replaced aging vehicles and took advantage of cheap financing.
Chrysler Group LLC posted a 34 percent U.S. sales increase in March, while sales at General Motors Company (NYSE: GM) and Ford Motor Company (NYSE: F) rose by 12 percent and 5 percent, respectively. Toyota Motor Corporation (NYSE: TM) reported a 15 percent gain and Volkswagen AG said sales were up by 35 percent.
Excluding transportation, orders fell 1.1 percent after a 1.9 percent rise in February. Economists had forecast a 0.5 percent rise.
Growth in the manufacturing sector has been a major source of economic growth since the recession officially ended in June 2009. Wednesday's report indicates manufacturing will contribute less to U.S. economic growth this year than previously expected.