Factory orders fell again in September, drop 1%

WASHINGTON - Orders to U.S. factories fell in September for a second straight month, with a key category that tracks business spending plans also losing ground.

Factory orders dropped 1% in September following a 2.1% decline in August, the Commerce Department reported Tuesday. A category that serves as a proxy for business investment spending slipped 0.1%.

The September result was led by a big 36% fall in the volatile category of commercial aircraft. There was widespread weakness in a number of other areas including primary metals, machinery and computers.

U.S. manufacturers have been squeezed this year as a strong dollar makes American products less competitive overseas. Weak economies in China and other key foreign markets have also cut into exports.

Orders for motor vehicles and parts edged up a modest 0.4%, but demand in transportation overall was off 3.1%. Outside the volatile transportation sectors, orders were down 1.4%, the fifth drop in the past six months.

Demand for all durable goods, items expected to last at least three years, fell 1.2%. Demand for nondurable goods such as paper, chemicals and food fell 0.8%.

Economic growth as measured by the gross domestic product slowed to a moderate 1.5% rate in the July-September quarter following a 3.9% advance in the second quarter. Many economists are projecting GDP to accelerate to around 2.5% in the current October-December period, as strength in consumer spending offsets continued weakness in manufacturing.

The Institute for Supply Management reported Monday that factory activity slowed in October to its slowest pace since May 2013.

A slowdown in China, the world’s second-largest economy, has delivered a direct hit on construction equipment makers such as Caterpillar. Yet there are signs that China’s economy might be stabilizing: A survey of its manufacturers over the weekend found that its factory activity is still contracting but at a slower pace.

Through September, orders to U.S. factories are down 7.2% compared to the same period in 2014.