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U.S. factory orders fall on weak transportation demand

In this file photo, Boeing employees work on the 777 airplane assembly line.

Ted S. Warren/Ted S. Warren/AP

New orders for U.S. factory goods fell in January as demand for transportation equipment weakened, but the underlying strength in manufacturing remained intact.

The Commerce Department said orders for manufactured goods dropped 2.0 per cent. Economists polled by Reuters had forecast orders falling 2.2 per cent after a previously reported 1.8 per cent increase in December.

Factory orders were weighed down by a 19.8 per cent plunge in transportation equipment as bookings for defence aircraft and parts tumbled.

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Orders excluding the volatile transportation category increased 1.3 per cent, pointing to underlying strength in the sector that carried the economy out of the 2007-09 recession.

The Institute for Supply Management said last week strong orders pushed manufacturing activity to its highest level in more than 1-1/2 years in February.

The Commerce Department also said orders for durable goods, manufactured products expected to last three years or more, fell 4.9 per cent instead of the 5.2 per cent drop reported last week.

Durable goods orders excluding transportation were up 2.3 per cent rather than 1.9 per cent.

Orders for non-defense capital goods excluding aircraft – seen as a measure of business confidence and spending plans – increased 7.2 per cent in January instead of the previously reported 6.3 per cent surge.

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