NEW YORK (CNN/Money) -
Demand for durable goods made in U.S. factories fell in April, the government said Wednesday, as the struggling manufacturing sector came back to earth after a strong March.
The Commerce Department reported that orders for goods made to last three years or longer, such as cars and computers, fell 2.4 percent after rising a revised 1.4 percent in March. Economists, on average, expected orders to fall 1 percent, according to a Reuters poll.
The April decline, the biggest since a 4.6-percent drop in September 2002, was driven mainly by a plunge in demand for motor vehicles and defense aircraft.
Orders for non-defense capital goods, excluding aircraft -- a measure seen by many economists as a proxy for business capital spending, upon which the future strength of the economy likely depends, fell 3.0 percent after gaining 4.7 percent in March.
U.S. stock markets shook off the report, posting modest gains. Treasury bond prices fell.
Wednesday's report mirrors one by the Federal Reserve earlier this month that showed factories in April used the smallest percentage of their total capacity since 1983.
Though many economists think the broader economy is poised for a rebound, there seems to be little relief in sight for the long-suffering factory sector, which has been shedding jobs steadily for years -- manufacturing payrolls are 2.4 million jobs lighter than at their peak in March 2000, and many of those jobs are simply never coming back, having fled to countries where labor is cheaper.
A recent survey by the Institute for Supply Management, which represents the nation's purchasing managers, found manufacturers expect to keep laying off workers this year, as an overhang of production capacity likely will keep them from investing in plant expansion.
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