US manufacturing orders post second straight monthly drop in February

New orders for US-made products fell for a second consecutive month in February, amid slumping demand for civil aircraft and signs that business spending on equipment remained weak in the first quarter.

Industrial orders fell 0.7%, after falling 2.1% in January. Economists polled by Reuters had forecast a 0.5% decline. Orders increased 3.0% year-on-year in February.

Rising borrowing costs as the Federal Reserve grapples with high inflation has cooled demand for goods, which are normally bought on credit. Demand may come under pressure after the recent failure of two regional banks, which stressed the financial sector.

The Institute of Supply Management reported on Monday that its manufacturing PMI fell in March to the lowest reading since May 2020. All sub-components of the PMI fell below the threshold of 50 for the first time since 2009.

Transport equipment orders fell 2.8% after falling 14.0% in January. Motor vehicle orders rose 0.8% but were offset by a 6.6% drop in civil aircraft orders.

Orders for machinery were down 0.6%, while orders for computers and electronics were up 0.1%. Orders for electrical equipment, appliances and components increased by 0.7%.

The Commerce Department also said orders for non-defence-related capital goods, excluding aircraft, which are seen as a measure of plans for business spending on equipment, fell 0.1% in February, instead of rising from 0. .2% reported last month.

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