Durable goods orders crash by 5.3%

Economists see further slippage in coming months

By Tom Stundza -- Purchasing, 2/27/2008 11:46:00 AM

Durable goods orders sank 5.3% in January, or $12 billion, to $212.8 billion, the Commerce Department reported this morning, signaling further economic weakness. The decline was the first setback in durable goods demand since October and was the biggest decline since a similar 5.3% drop last August. 

The Associated Press says manufacturers have been caught in the weakness engulfing the rest of the economy. The weakness was led by a 13.4% decrease in orders for transportation equipment, which reflected a 30.5% plunge in demand for commercial aircraft, a very volatile category, and a 0.8% fall in demand for motor vehicles and parts. In other signs of weakness, orders for machinery were down 1.4%, orders for computers plunged by 11.7% and orders for fabricated metals fell by 4.1%.

Companies have put investment plans on hold as consumers rein in spending in the face of the biggest housing slump in a quarter century and near-record fuel costs, according to a Bloomberg News Service report. “Capital spending is going to slow and is probably going to decline a little bit in the first half'' of the year, says Nigel Gault, director of U.S. research at Global Insight Inc., a Lexington, Mass., forecasting firm. “If businesses see their markets and profits growing more slowly, they are going to be more cautious about spending.”