Demand for long-lasting U.S. manufactured goods dropped by the most in three years in March and a gauge of business spending plans fell, suggesting factory activity lost momentum as the first quarter ended.
Durable goods orders tumbled 4.2 per cent, the largest decline since January 2009, the Commerce Department said on Wednesday after a downwardly revised 1.9 per cent increase in February.
Economists had forecast orders for durable goods, which range from toasters to aircraft, falling 1.7 per cent after a previously reported 2.4 per cent rise in February.
Orders were dragged down by a 12.5 per cent plunge in bookings for transportation equipment - the most since November 2010.
Excluding transportation, orders fell 1.1 per cent after a 1.9 per cent rise in February. Economists had forecast this category rising 0.5 per cent.
The report added to signs that manufacturing exited the first quarter with less momentum. Data last week showed industrial production was flat in March for a second straight month, while some gauges of regional factory activity weakened in April.
Manufacturing has been one of the main sources of economic growth, but is slowing as euro zone economies slide into recession and China cools.
The plunge in orders for transportation equipment reflected a 47.6 per cent drop in bookings for civilian aircraft. Boeing received only 53 orders for aircraft, according to the plane maker's website, down from 237 in February.
Orders for motor vehicles barely rose last month.
Adding to the report's weak tenor, non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 0.8 per cent after an upwardly revised 2.8 per cent rise the prior month.
Economists had expected this category to rise 0.9 per cent after a previously reported 1.7 per cent increase.
But shipments of non-defense capital goods orders excluding aircraft, which go into the calculation of gross domestic product, rose 2.6 per cent after increasing 1.4 per cent in February.
This suggests that growth in business investment in capital goods increased in the first quarter, but probably not as much as in previous periods.