Durable goods sink most in 3 years in January
New orders for long-lasting manufactured goods fell in January by the most in three years as demand slumped across the board, suggesting the economy started the year on weaker footing than expected.
Durable goods orders dropped 4.0 percent, the biggest decline since January 2009 when the country was still mired in a deep recession, according to Commerce Department data on Tuesday.
It is not a great start to January, said David Watt, a currency strategist at RBC Capital in Toronto.
Data on durable goods can be volatile, and January's weakness followed strong gains in December and November. Still, economists had forecast orders falling just 1.0 percent.
A slew of economic data had recently allayed fears economic growth could slow sharply in the first quarter. Other gauges for manufacturing have been more solid, for example, and the unemployment rate sank to a three-year low last month.
The weak orders reading could add to concerns about the many threats faced by the U.S. economic recovery.
Europe's debt crisis continues to fester, while rising gasoline prices also could sting consumers. In a sign of Europe's ongoing struggle to tackle its crisis, Germany's high court issued a ruling on Tuesday that raised a hurdle to swift action in financial rescues.
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Graphic - durables goods: http://link.reuters.com/qab86s
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Durable goods range from toasters to big-ticket items like aircraft which are meant to last three years and more.
Excluding transportation, orders fell 3.2 percent. Economists had expected that reading to be flat. Machinery orders dropped 10.4 percent, the largest decline since January 2009.
U.S. stock index futures pared gains following the data's publication, while prices for U.S. government bonds rose.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for future business investment, fell 4.5 percent, the steepest drop in a year.
A 6.1 percent drop in bookings for transportation equipment - including a 19 percent fall in civilian aircraft orders - dragged on the overall reading for durable goods.
Boeing received 150 orders for aircraft during the month, according to the plane maker's website, down from 287 in December.
Orders for motor vehicles edged up 0.9 percent.
Shipments of non-defense capital goods orders excluding aircraft, which go into the calculation of gross domestic product, fell 3.1 percent in January, the biggest decline since April 2009.
(Additional reporting by Luciana Lopez in New York; Editing by Andrea Ricci)
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