WASHINGTON — Orders to U.S. factories plunged by the largest amount in nearly two years in August as the credit strains began to hit manufacturing with full force.
The Commerce Department reported that orders for manufactured goods dropped 4% in August, compared with July. That's a much worse performance than the 2.5% decline that economists had expected. It was the biggest setback since a 4.8% plunge in October 2006.
The weakness was led by big declines in orders for aircraft, which were down 38.1%, and autos, which fell 10.6%, the worst performance in nearly six years.
Orders for nonmilitary capital goods excluding aircraft, considered a good indication of business investment plans, fell 2.4%, the biggest setback in this category in 19 months. It's a sign that businesses are slashing their investment plans in the weak economy, and growing credit strains are making it hard for companies to get loans to expand and modernize.