New orders at US factories rose a smaller-than-expected 0.2% in February, as civilian aircraft and defense capital goods orders outweighed declining demand for primary and fabricated metals, machinery and electrical equipment, a government report showed.
February's rise in factory orders followed a revised 3.9% percent drop in January. But if transportation orders in February were stripped out, orders fell 2%, the biggest decline since April 2003.
Earlier today figures showed that US consumer spending growth slowed sharply and inflation eased in February, the government said today in a report suggesting the Federal Reserve's long campaign of interest rate increases may soon be over.
The Commerce Department said consumer spending rose just 0.1% in February, just above market expectations for an unchanged reading, after warm weather fueled a January shopping spree. Personal income climbed 0.3%, just below Wall Street forecasts for a 0.4% rise.
US inflation slowed. The price index for consumer spending was flat in February after a 0.5% surge in January. When volatile food and energy costs are stripped out, the so-called core PCE price index rose 0.1%, in line with forecasts and down from a 0.2% increase in January.
Over the last 12 months, inflation eased to 2.9% from 3.1% in January. Core inflation, the price measure favored by the Fed, was steady at 1.8%.
Policy-makers at the US central bank raised benchmark interest rates on Tuesday for the 15th straight time since mid-2004 in a bid to head off inflation pressures. Most analysts expected one more rate increase in May before the Fed retires to the sidelines to gauge the impact of the higher borrowing costs.
The scant 0.1% increase in consumer spending was the weakest since August 2005, but had been expected because of strong spending in an unusually warm January. January's spending increase was revised down slightly to a 0.8% gain from the originally reported 0.9% surge.
The saving rate was negative for the fourth straight month, at -0.5%, meaning Americans spent all of their income and more in February, either by borrowing or cashing in savings. The saving rate has not been positive since March 2005.
