US durable goods orders slump

New orders for long-lasting US-made manufactured goods unexpectedly fell 1.7 per cent during February and a key gauge of companies' appetite for investment also shrank, according to data today that will reinforce concern the economy has chilled.

US stock futures fell, government Treasury prices rose and the dollar weakened on the Commerce Department data, which compounds a rash of bad economic news that investors think will force the Federal Reserve to slash interest rates again.

"This report further corroborates the notion that, in addition to the financial crisis, the US faces a real economic downturn," said TJ Marta, a fixed income strategist at RBC Capital Markets in New York.

Analysts surveyed by Reuters predicted the report would show overall durable goods orders rose 0.8 per cent in February, rebounding from January's revised fall of 4.7 per cent. This was previously reported as a 5.1 per cent drop.

A global credit crisis sparked by the collapse of the US subprime mortgage market has spilled into the wider economy. This has forced the US central bank to cut its benchmark interest rate 3 percentage points since mid-September, and inject billions of dollars into the financial system to stop it seizing up.

"Very weak numbers on the headline, so highlighting the domestic demand is really weighing on capital spending overall," said Camilla Sutton, a currency strategist at Scotia Capital in Toronto.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, declined 2.6 per cent after falling a downwardly revised 1.8 per cent in January, the Commerce Department said.

It was the biggest decline since a 3 per cent fall in October 2007 and was far larger than the 0.1 percent slip forecast by economists.

Machinery orders slumped 13.3 per cent, the steepest decline since records began in 1992, although the Commerce Department noted that the previous two months had both showed gains.