Factory orders dropped 0.8 percent in June

Associated Press

WASHINGTON

Businesses cut back on orders for airplanes, autos and heavy machinery in June, lowering demand for factory goods for the second time in three months.

The Commerce Department said Wednesday that orders to U.S. factories fell 0.8 percent in June. A key category that tracks business-investment plans managed a small increase, offering a positive sign amid other gloomy reports on the economy.

High energy prices and supply disruptions caused by the Japan crisis have slowed manufacturing this spring, along with the broader economy.

Overall demand for factory goods fell to $440.7 billion in June. That’s still 31.2 percent higher than the low point during the recession reached in March 2009.

Manufacturing had been one of the strongest areas of the economy since the recession ended. But activity slowed this spring.

Factories had their weakest growth in two years in July, according to the Institute for Supply Management. The private group of purchasing executives said its index fell to 50.9, the lowest reading since July 2009. Any reading above 50 indicates expansion.

Orders for nondefense capital goods excluding aircraft, the category that serves as a proxy for business- investment plans, showed a 0.4 percent rise June. That represented an upward revision from an estimate last week that this category had fallen 0.4 percent in June.