U.S. August Factory Orders Sharply Fall More-Than-Expected, Down By 4%

Washington, D.C. (AHN) - The U.S. factory orders for the month of August decreased sharply on higher fuel prices and raw material rates, missing the market analysts' projection.

The Commerce Department reported Thursday that the new factory orders declined at the fastest rate in two year by 4 percent in August, followed a 0.7 percent July increase.

New orders for manufactured goods in August, down following five consecutive monthly gains, decreased by $18.6 billion to $444.4 billion on lower orders for metals, machinery and vehicles, the report indicated.

The market analysts had anticipated a drop in the orders of U.S.-made factory goods by 3 percent in August, showing no signs of improvement in the country's economy.

The U.S. goods orders for August, excluding orders for transportation products which tend to be volatile, declined by 3.3 percent, the largest fall since September 2001.

The report indicated that the shipments and orders for the non-durable goods, including food, chemicals, and petroleum and coal products, surprisingly edged down by 3.3 percent or $8.0 billion.

The drop in the non-durable goods demand is partly driven by higher prices for commodities.

Demand for durable products, , which make up just under half of total orders, plunged 4.8 percent in August, the most this year after it tumbled by 4.4 percent in January.

While, shipments of manufactured durable goods in August declined by $8.3 billion or 3.8 percent to $209.2 billion from 2.2 percent increase in the month of July.

Orders for non-defense capital goods, excluding aircraft and parts, declined by as much as 2.4 percent, compared with the 2 percent fall projected by the department last week.

While the orders for civilian aircraft and parts was down by 38.1 percent, while demand for autos plunged by 10.6 percent, the most since 2002.