U.S. manufacturing is struggling as businesses brace for the year-end "fiscal cliff" in an economy that entered the third quarter with less momentum than thought, data released Thursday showed.
New orders for long-lasting manufactured goods plunged 13.2% in August, the Commerce Department said, the sharpest drop since January 2009 when the economy was deep in recession.
The decline was led by the volatile transportation equipment sector, hit by Boeing aircraft order cancelations. Excluding transportation, durable goods orders were down 1.6%.
Durable Orders Wither
"Durable orders have withered this year due to defense spending cuts, the end of accelerated depreciation, the recession in Europe, the emerging markets slowdown and the fiscal cliff," said Chris Low at FTN Financial.
The data highlighted a lackluster economy 40 days before President Barack Obama faces off against Republican rival Mitt Romney in a Nov. 6 election dominated by voters' worries about high unemployment and slow growth.
The so-called "fiscal cliff," automatic tax increases and spending cuts at year-end, may throw the world's largest economy back into recession, economists say.
Facing that uncertainty, businesses have been reluctant to hire and invest, hoping that a bitterly divided Congress will avert the fiscal tightening.
