New orders for long-lasting U.S. manufactured goods fell in February as the sector continues to struggle with the lingering effects of a strong dollar and lower oil prices.
The Commerce Department said on Thursday that orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, declined 2.8 percent last month after a downwardly revised 4.2 percent increase in January.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, decreased 1.8 percent after advancing by a downwardly revised 3.1 percent in January. These so-called core capital goods orders were previously reported to have increased 3.4 percent in January.
Economists polled by Reuters had forecast durable goods orders falling 2.9 percent last month and orders for core capital goods slipping 0.1 percent.
The drop in durable goods orders last month bucks recent data that have suggested the downward spiral in manufacturing was close to an end. Several reports in recent days have shown a pick-up in regional factory activity in March, leading to optimism that a broader manufacturing survey will show the sector expanded this month for the first time since September.
Manufacturing, which accounts for 12 percent of the U.S. economy, has been hammered by the dollar's strength, weak global demand and capital spending cuts by oilfield service firms like Schlumberger and Halliburton following a plunge in oil prices.
Efforts by businesses to sell unwanted inventory have also meant fewer orders placed, adding to pressure on factories. But the dollar's gains versus the currencies of the United States' main trading partners have slowed since the start of the year and the oil price slide has become less pronounced.
The drop in durable goods orders last month was led by a 27.1 percent plunge in civilian aircraft orders, which contributed to a 6.2 percent drop in bookings for transportation equipment.
Boeing reported on its website that it had received orders for only two aircraft last month, down from 68 planes in January.
Orders for primary metals, fabricated metal products, machinery, computers and electronic products as well as electrical equipment, appliances and components also fell. Orders for motor vehicles and parts rose 1.2 percent.
Shipments of core capital goods - used to calculate equipment spending in the gross domestic product report - fell 1.1 percent last month after sliding 1.3 percent in January.
The drop in shipments in February could prompt economists to trim first-quarter GDP growth estimates, which are currently around a 2 percent annualized rate. The economy grew at a 1.0 percent rate in the fourth quarter.
Unfilled durable goods orders fell 0.4 percent last month after being unchanged in January. Durable goods inventories fell 0.3 percent and have been down in seven of the last eight months.
(Reporting by Lucia Mutikani; Editing by Paul Simao)