By Anna Willard
WASHINGTON (Reuters) - U.S. orders for costly manufactured goods fell more than expected in March, the government said on Wednesday in a report that was skewed by the surprise removal of all data for semiconductors but which still revealed some economic weak spots. ADVERTISEMENT
Orders for durable goods, items intended to last for three years or more, fell 0.6 percent to $173.4 billion in March after an upwardly revised 2.7 percent rise in February, the Commerce Department said. March's drop was steeper than analyst expectations of a 0.2 percent decline.
However, Commerce said the report no longer includes numbers for semiconductors, which account for around 3-3.5 percent of the overall data, because of the large number of semiconductor manufacturers opting not to participate in the survey. February's revised increase and January's revised 0.9 percent rise excluded the previously reported semiconductor numbers.
``There is a big wrinkle in these numbers,'' said Ian Shepherdson, chief U.S. economist with High Frequency Economics in Valhalla, New York.
``Given this huge distortion, the only sensible measure of orders to look at is the total ex-transportation and ex-computers, etc.''
Even so, the report did not paint a pretty picture of the economy. Durable goods orders excluding defense fell 1.2 percent the biggest decline since a 10.9 percent drop in September and excluding transportation orders were down 0.1 percent. Many sectors posted steep declines.
``It doesn't look to be that strong, the shipments numbers, non-defense capital shipments are basically flat on the month, the level is still a good deal lower than where it was last year,'' said Joseph Lavorgna, senior economist at Deutsche Bank Securities, New York.
``There is a recovery, but it is slow.''
The report also casts doubt on Federal Reserve Chairman Alan Greenspan's claim that there are signs of a revival in crucial business spending.
Machinery orders dropped 1.4 percent and demand for computers and electronic products fell 1.7 percent.
Greenspan said in questioning after a speech on Monday that he saw early signs of a recovery in business capital investment but he cautioned that the pick-up would likely be a slow one.
Business investment in new buildings and equipment is crucial to a solid recovery in the U.S. economy because there will not be the same degree of pent-up consumer demand as in past rebounds from recession.