Factory orders in surprise decline

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NEW YORK (CNNMoney.com) -- Factory orders for big-ticket items fell unexpectedly in February, with orders for machinery hitting a record low, as economic weakness continued to hurt manufacturers.

The Commerce Department said Wednesday that orders for durable goods fell 1.7% last month. Economists surveyed by Briefing.com were expecting a 0.8% increase.

But the decline was narrower than the revised 4.7% drop registered in January.

Factory orders for machinery fell 13% - the largest percentage drop on record - after rising in the previous two months.

Orders for non-defense capital goods, which economists use as a barometer for business activity, fell 1%, extending the 8.4% decrease registered in January.

Excluding orders for transportation equipment, orders for durable goods fell 2.6%. Excluding new defense orders, the overall measure fell 1.6%.

"This is another damning report," Scott Anderson, senior economist at Wells Fargo, said.

Two consecutive months of decline and the weakness in orders for non-defense capital goods suggest that "the economy has slipped into recession," Anderson said.

"Manufacturers are feeling the pressure from weaker demand but also rising cost of production," he said.

Soaring prices for energy and raw materials are two important factors hampering manufacturers, according to Anderson.

There was also a record decline in shipments of computers and electronic products, which were down 10.3%, led by weakness in orders for semiconductors.

But new orders for computers and electronic equipment rebounded following sharp declines last month.

Orders for transportation equipment increased 1.1%, the largest increase of any sector in the survey.