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Associated Press
A truck drives past stacks of containers unloaded from a ship in Baltimore. U.S. factory orders dropped 4 percent in March.

Factory orders off 4% in March

– Orders to U.S. factories fell in March by the largest amount in seven months, but a key category that signals business investment plans increased.

Factory orders dropped 4 percent in March, reflecting a big plunge in the volatile category of commercial aircraft, the Commerce Department reported Friday. Orders had been up 1.9 percent in February.

Orders in a category considered a proxy for business investment plans rose 0.9 percent, a modest gain but an improvement from a preliminary report last week that had shown a decline.

Weaker economies overseas and the impact of across-the-board government spending cuts have made businesses more cautious, dampening demand for manufactured goods. But even with the March decline, total orders stood at $467.3 billion, 43 percent above the recession low hit in March 2009.

Demand for durable goods, items expected to last at least three years, fell 5.8 percent in March, after a 4.3 percent February increase. Orders for nondurable goods, items such as chemicals, petroleum and paper, were down 2.4 percent following a 0.1 percent dip in February. This weakness partly reflects falling prices for energy products.

The 0.9 percent rise in core capital goods, the category watched for business investment, followed a 4.8 percent decline in February and a 6.7 percent surge in January.

In the durable goods area, orders for commercial aircraft plunged 48.3 percent. And demand for autos and auto parts fell 0.4 percent, although the drop is expected to be reversed in coming months given recent strong auto sales.

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