New orders for manufactured goods in the US plunged 4% in the month of August. The contraction follows a downwardly-revised 0.7% gain in orders in July. The data, first reported by the Commerce Department, is worse than expected, as economists were expecting a number closer to 3.0%. Factory orders had been positive for five consecutive months before this month’s report.

Excluding the 9.1% drop in transportation orders, factory orders fell 3.3%, the biggest drop since September 2001. Orders for core capital equipment goods, the kind of tools businesses invest in order to expand or update their productive capacity, fell 2.4%, the biggest drop since January 2007. Shipments of core capital equipment fell 2.1%.

Report Details

There were few bright spots in the report. Orders for electronics rose 2%, boosted by a surge in orders for defense communications equipment and a 4% increase in orders for computers.

Orders for primary metals fell 9.6%, the largest drop in 15 years.

Orders for machinery fell 6.6%.

Orders for transportation goods fell 9.1%, including a 10.6% drop in orders for motor vehicle parts and a 38% drop in orders for civilian aircraft.

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