US factory orders hit 7-month low

Orders for planes saw a dramatic drop

US orders for factory goods saw their biggest drop in seven months in August, US Commerce Department data showed.

Orders fell by 3.3% compared to a month earlier - worse than the 2.8% forecast and reversing July's 3.4% rise.

Fewer orders for commercial aircraft had been a major factor behind the fall - dropping nearly 40% for the month.

Signs that the world's biggest economy is slowing come amid wider fears over a global credit crisis that has impacted markets worldwide.

'Weakness'

Overall transport-related orders fell by 11.1% for the month, including an 8.5% fall in automotive orders.

The latest figures also showed a drop in household-related items with orders for home appliances 7.2% lower while furniture declined 4.4%.

Shrinking demand for such goods coincides with a cooling US housing economy that has been behind the latest credit crunch, as increasing numbers of individuals in the US default on mortgage loans.

Overall the latest figures showed the largest decline since orders dropped 4.2% in January.

But analysts seemed unperturbed by such figures.

"I don't think factory orders are a significant new indication of weakness," said Charles Lieberman, chief investment officer at Advisors Capital Management.

But in contrast he said investors would be closely watching data to be revealed on Friday regarding jobs.