WASHINGTON – Orders to U.S. factories for big-ticket manufactured goods fell 1.6% in February, the biggest drop in four months, reflecting a plunge in the volatile commercial aircraft category. Demand in a key sector used to track business investment decisions also declined in February.
The Commerce Department said Tuesday that the February decline came after a small 0.1% rise January and was the weakest showing since a 4.3% fall in October. Orders in a category that serves as a proxy for business investment plans edged down 0.1% in February after a 0.9% advance in January.
The manufacturing sector has been strained for the past few months, reflecting a global economic slowdown and rising trade tensions which have hurt U.S. exports. But there have been more hopeful signs recently.
The Institute for Supply Management reported Monday that its manufacturing index rose to 55.3 in March, up from a reading of 54.2 in February, with employment gains in manufacturing a key driver of the increase. Analysts said factories are hiring to make sure they can meet demand in the coming months.
The report on new orders for durable goods, items expected to last at least three years, showed that much of the overall weakness came from a 31.1% plunge in orders for commercial aircraft, a drop that followed health gains in the past two months.
Orders for motor vehicles and parts dipped a small 0.1% following a 0.5% decline in January.
Demand for machinery fell 0.3% while orders for computers and electronic products fell 0.3%.
U.S. manufacturers have faced a number of challenges over the past year including trade wars begun by President Donald Trump. Trump is trying to pressure China and other nations to open their markets to more U.S. exports, but Trump’s imposition of tariffs on foreign goods has prompted other countries to levy retaliatory tariffs on U.S. products.
U.S. and Chinese negotiators are scheduled to meet in Washington this week to continue looking for a way to reach a trade deal that would remove the threat of higher tariffs.