New orders for U.S. factory goods fell for a second straight month in September as the manufacturing sector continues to struggle under the weight of a strong dollar and deep spending cuts by energy companies.
The Commerce Department said on Tuesday new orders for manufactured goods declined 1% after a downwardly revised 2.1% drop in August.
Factory activity, which accounts for about 12% of the American economy, is also being constrained by efforts by businesses to reduce an inventory overhang and tepid global demand. But the worst could be over for the sector after a report on Monday showed new orders rose in October for the first time since July.
Economists had forecast factory orders falling 0.9% in September after a previously reported 1.7% decline in August.
The U.S. dollar has gained 16.8% against the currencies of the United States' main trading partners since June 2014, which has undercut export growth and weighed on the profits of multi-nationals.
Orders for transportation equipment fell 3.1% in September, largely reflecting a drop in aircraft orders. Motor vehicle production remains a bright spot in manufacturing, with orders for automobiles and parts rising 1.5% in September.
The U.S. Commerce Department also said orders for non-defense capital goods excluding aircraft - seen as a measure of business confidence and spending plans - slipped 0.1% instead of the 0.3% drop reported last month. This also supports the view that the worst of the manufacturing slump might be over.
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