Washington, April 3 (Bloomberg) -- Orders at U.S. factories probably dropped in February tothe lowest level in 15 months as demand for airplanes and business equipment fell, economistssaid in advance of today's government report. The likely decrease of 0.1 percent to $366.2 billion would follow a decline of 3.8 percent inJanuary and put new orders at the lowest level since $365.6 billion in November 1999. A slowing economy has prompted businesses and consumers to delay purchases. At ParkerHannifin Corp., the largest maker of hydraulic equipment, North American industrial orders fellin February for the fifth straight month compared with a year earlier, the Cleveland companyreported March 5. ``Investment is declining because of a lack of confidence at businesses, profit disappointment,and excess capacity,'' said Stuart G. Hoffman, chief economist at PNC Financial ServicesGroup in Pittsburgh. The Commerce Department is scheduled to release the statistics at 10 a.m. Washington time.The February estimate is based on the median of 39 forecasts in a Bloomberg News survey ofbanks and investment companies. Factory orders peaked in June at a record $408.1 billion, as companies expected consumerspending would rebound from its slowest pace in three years and business investment wouldkeep rising at a double-digit annual pace. Instead, consumer spending cooled further andbusiness investment fell for the first time in almost 10 years. That left auto dealers, semiconductor-chip distributors, and other companies with excessgoods, causing a delay in new orders. ``While consumer spending is holding up decently, we'restill not back at the desired supply-demand balance,'' said David Orr, chief economist at FirstUnion Corp. in Charlotte. That helps explain why factory orders have yet to rebound.
Durable Goods
The government already has reported that orders for durable goods fell in February, led by aslump in bookings for aircraft and business equipment. Boeing Co., the world's largest aircraftmaker, has said it received orders for 17 planes in February, down from 41 in January. Randolph Baseler, Boeing's senior vice president for marketing, yesterday said ``airlines wouldwant to wait and see about the economic conditions before making new orders.'' And John Chambers, chief executive of Cisco Systems Inc., told investors last month he hasn'tseen a rebound in customer spending for telecommunications equipment. Cisco, the No. 1maker of computer networking gear, projects sales will be ``flat to down 5 percent'' during thethree months ending in April.
Nondurable Goods
Demand for many non-durable goods has also slipped. DuPont Co., which invented nylon, saidyesterday it will cut 4,000 jobs, or 4 percent of its workers, as demand from clothing makers fornylon and polyester slows. U.S. paper companies have come under earnings pressure because of reduced demand in aslowing economy. Bowater Inc., the biggest U.S. newsprint maker, is reducing newsprintproduction by 60,000 metric tons, or 2 percent of its yearly capacity, through May and lastmonth raised prices. H. J. Heinz Co., maker of StarKist tuna and 9 Lives cat food, reported its tuna sales fell 4percent in the quarter ended Jan. 31. The company has said it will close a tuna plant in PuertoRico. A separate measure of manufacturing, the National Association of Purchasing Management'sfactory index, unexpectedly rose in March for the second consecutive gain. The indexincreased to 43.1 last month from 41.9 during February after falling in January to 41.2, thelowest level in a decade. Last month's index reflected gains in measures of orders andproduction March's index was also the first since December to be above 42.7, the level that Tempe,Arizona, organization says historically corresponds with conditions found during a recession.The overall factory index has been below 50, the level that suggests contraction inmanufacturing, since August.