Factory orders drop 0.8%

Businesses cut back on orders for airplanes, autos and heavy machinery in June, lowering demand for factory goods for the second time in three months. The Commerce Department says orders to U.S. factories fell 0.8% in June. A key category that tracks business investment plans did manifest a small increase, offering a positive sign amid other gloomy reports on the economy. Nevertheless, high energy prices and supply disruptions caused by the Japan crisis have slowed manufacturing this spring, along with the broader economy. Overall demand for factory goods fell to $440.7 billion in June. That's still 31.2% higher than the low point during the recession reached in March 2009. Until this spring, manufacturing had been one of the strongest areas of the economy since the recession ended. Factories had their weakest growth in two years in July, according to the Institute for Supply Management. The private group of purchasing executives said its index fell to 50.9, the lowest reading since July 2009. Any reading above 50 indicates expansion.

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