Demand for factory goods made in U.S. falls in March

Tumble in orders for aircraft blamed

Aircraft orders plummeted nearly 50 percent in the United States in March. But the category is extremely volatile, fluctuating sharply from month to month.

WASHINGTON -- Demand for U.S. factory goods dropped in March by the most in three years, driven lower by a sharp fall in volatile orders for commercial aircraft. Still, more recent data suggest the decline may be temporary.

The Commerce Department said Wednesday that orders for factory goods fell 1.5 percent, the steepest decline since March, 2009, when the economy was mired in recession. Orders rose 1.1 percent in February.

A key reason for the drop was that aircraft orders plummeted nearly 50 percent. Those orders can fluctuate sharply from month to month.

Excluding transportation goods, orders were unchanged. Demand for less durable items, such as food and gasoline, rose 0.5 percent.

Factory orders have rebounded after plummeting in the recession. Orders in March totaled $460.5 billion, 37 percent higher than the recession's low point reached three years ago. That's still 4.2 percent below the peak hit in December, 2007, the month the recession began.

Other data suggest the March decrease won't endure. A survey released Tuesday by the Institute for Supply Management found that the manufacturing activity grew in April at the fastest pace in 10 months. New orders, production, and a measure of hiring all rose. The increase in new orders points to rising output in the coming months.

Factories account for only about 9 percent of total payrolls but added 13 percent of the new jobs created last year.

Manufacturers have added 120,000 jobs in the past three months, about one-fifth of all net gains during that period.

The government reported last week that the overall economy grew at an annual rate of 2.2 percent in the January-March period.

While that was down from growth of 3 percent in the final three months of last year, it was an improvement over the 1.7 percent economic growth turned in for all 2011.