Plunge in durable goods orders clouds U.S. outlook

WASHINGTON, Wed Apr 25, 2012 – Demand for long-lasting manufactured goods tumbled by the most in three years in March and businesses cut back on spending plans, suggesting the economy slowed as the first quarter drew to a close.

Durable goods orders dropped 4.2 percent, the largest decline since January 2009 when the economy was nose-diving, Commerce Department data showed on Wednesday. Economists had expected a drop of just 1.7 percent.

February orders were revised to show only a 1.9 percent increase instead of the previously reported 2.4 percent rise.

“This adds to the evidence that momentum in the economy sort of fell flat in March,” said Ellen Zentner, a senior U.S. economist at Nomura Securities in New York.

Data on durable goods, items ranging from toasters to aircraft that are meant to last three years or more, is notoriously volatile and investors on Wall Street ignored the report. Stock prices rose, cheered by forecast-beating results from Apple. Prices for U.S. Treasury debt fell, while the dollar was marginally weaker against a basket of currencies.

The data, which was the latest to show the factory sector losing a step in March, came as officials at the Federal Reserve met for a second day to deliberate on monetary policy, and it reinforced the central bank’s views of moderate growth.