Factory Orders tumble much more than expected

New orders for factory products tumbled much more than expected in May, posting their sharpest drop since the depth of the recession and their first decline in nine months, a government report showed on Friday.

The Commerce Department said Friday that orders for manufactured goods decreased 1.4 percent in May. It was the biggest drop since March 2009.

Excluding the volatile transportation sector, orders fell 0.6 percent. That number fell 0.7 percent in April, the worst showing in 13 months. Overall orders in April grew 1.0 percent.

Manufacturers are seeing a pause in demand after the industry helped the world’s largest economy emerge from the worst recession since the 1930s. Today’s figures underscore the Federal Reserve’s concerns that the European debt crisis poses a risk to a self-sustaining U.S. recovery.

“Manufacturing has been the star of the economy this year so any signs that conditions are turning would cause some concern,” Joel Naroff, president of Naroff Economic Advisors Inc. in Holland, Pennsylvania, said before the report. “The demand for products is slowing.”

Orders for big-ticket durable goods were down 0.3 percent, after a 2.0 percent increase in April. Electronics and commercial aircraft were among the weakest performers.

Demand for those goods expected to last less than three months were down 2.1 percent. Lower gas prices were partly to blame. But there were significant losses for makers of clothing, drinks and tobacco, and chemical products.

The dismal numbers followed a disappointing jobs report released earlier Friday. Employers cut 125,000 jobs, the most since October, the Labor Department said. That was dragged down by the loss of 225,000 temporary census jobs. Businesses added a net total of 83,000 jobs, better than May but not speed the recovery.

Manufacturing has been a rare bright spot, helping lead the country out of recession with increased hiring and productivity.

However, economists fear joblessness and less demand for exports could sap the sector’s strength in the coming months.

Sales and inventories “are very much in sync,” Samuel Allen, chief executive officer of Deere & Co., said in a June 23 interview in reference to the manufacturer’s agricultural business. “We do believe the recovery is underway,” he said. “We do believe it is moving slowly.”