Orders placed with U.S. factories fell in August by the most in seven months, raising concern the turmoil in credit markets eroded business confidence.
Bookings declined a greater-than-forecast 3.3 percent after a revised 3.4 percent gain in July that was smaller than previously estimated, the Commerce Department said today in Washington. Excluding transportation equipment such as cars and airplanes, demand declined 1.7 percent after a 1.7 percent gain.
The figures suggest business investment will slow in the second half of the year as a worsening housing recession hurts consumer spending. Economists project Federal Reserve policy makers will lower interest rates again to prevent economic growth from stalling.
``The volatility in financial markets in recent months probably introduced an element of caution in ordering,'' said Michael Moran, chief economist at Daiwa Securities America Inc. in New York.
This news shouldn't be that surprising considering the credit markets over the last few months. The real concern is what will happen over the next few months. If we see this trend continue, then we have a problem.
