Factory orders fall by largest amount in months

updated 11:09 a.m. ET Aug. 31, 2006

WASHINGTON - Orders to American factories fell in July by the largest amount in three months, reflecting a sharp drop in demand for commercial aircraft.

The Commerce Department reported that orders for manufactured goods fell by 0.6 percent, the biggest drop since a 2 percent plunge in April. Factory orders had risen by 1.5 percent in June and 1 percent in May.

The July decrease, which was slightly smaller than Wall Street had been expecting, reflected a 2.5 percent fall in demand for durable goods. Weakness in that area reflected a 10.6 percent drop in the volatile category of commercial aircraft.

Orders for nondurable goods, items such as food and clothing, rose by 1.6 percent in July, helping to cushion the drop in demand for durable goods, items expected to last at least three years.

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