Durable goods orders tumbled in February, a worse-than-expected result and the third fall in the past four months.
Separately, the number of U.S. workers filing new claims for unemployment benefits dropped slightly last week as the level remained consistent with a slowly improving labour market.
Manufacturers' orders for goods designed to last at least three years fell 0.9% to a seasonally adjusted $199.99 billion U.S., the Commerce Department said Thursday.
Economists surveyed by Dow Jones Newswires had predicted a 1.5% gain in durable goods orders.
Orders for commercial aircraft and parts jumped 26.7%. The volatile sector often swings overall figures but the gain in February wasn't enough to move the economic indicator into positive territory.
Excluding transportation, durable goods orders fell 0.6%.
Machinery, down two consecutive months, saw the largest decrease. New orders were down 4.2% to $26.63 billion U.S. Primary metals and communications equipment also weighed.
Bright spots included fabricated metal, up 2.1%, electrical equipment and appliances, up 2.6%, and cars, up 1.9%.
A key part of the report, new orders for non-defense capital goods excluding aircraft, slid 1.3% last month. The orders are a barometer of capital spending by businesses.
The manufacturing sector has been a key driver of the economic recovery -- responsible for rising output and new jobs. Factories helped drive growth as the economy struggled out of recession, with businesses demanding goods to fill empty shelves as consumers started slowly coming out of a long hibernation.
It's not clear whether the latest data are a one-time blip or a more troubling sign for the sector. Durable orders have fallen four of the past five months, but those weaker numbers follow solid gains -- so far in 2011 orders are up 7.6% compared to the previous year.
Another key report, the latest Institute for Supply Management's monthly index, had its strongest performance last month in nearly seven years. New orders and production, driven by strength in exports, pushed the index to a very strong 61.4 from 60.8 in January.
Meanwhile, the recovery is on a firmer footing, according to the Federal Reserve. Consumer spending has gained while businesses have been investing more in equipment and software.
Thursday's report said orders for defense capital goods fell 24.8% in February. Capital goods orders dropped 1.3%. Non-defense capital goods orders increased 2.5%.
February shipments of durable goods rose by 0.3%. Inventories climbed 0.9%. Unfilled orders, a sign of future demand, increased 0.4%.
Elsewhere, initial jobless claims fell by 5,000 to 382,000 in the week ended March 19, the U.S. Labor Department said Thursday in its weekly report. The prior week's figures were revised up slightly, to 387,000 from an original estimate of 385,000.
Economists surveyed by Dow Jones Newswires forecast an unchanged level of claims in the week ending March 19.
Over the last month, claims have been close to or below 400,000, widely considered the point at which the economy is gaining more jobs than it's shedding.
