WASHINGTON (AP) ó Orders to U.S. factories fell for a second straight month, a worse-than-expected performance that provides further evidence that a housing slowdown and credit crunch are raising risks of a recession.
The Commerce Department reported Wednesday that factory orders dropped by 1.3 percent in February, about double the downturn that economists had been expecting. Orders had fallen an even bigger 2.3 percent in January, the largest decline in five months.
The falloff in demand was widespread, with steep declines in orders for motor vehicles, various types of heavy machinery and demand for iron and steel.
Many economists believe the country has already been pushed into a recession. Federal Reserve Chairman Ben Bernanke, testifying before the Joint Economic Committee on Wednesday, said that the economy could shrink over the first half of this year, his most pessimistic assessment to date.
ěIt now appears likely that gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly,î Bernanke told lawmakers. Under one rule, six straight months of declining GDP would constitute a recession.
Bernanke said he still expected economic growth to strengthen in the second half of the year but he said, ěIn light of the recent turbulence in financial markets, the uncertainty attending this forecast is quite high and the risks remain to the downside.î
The report on factory orders showed demand falling by 1.1 percent for durable goods, items expected to last at least three years, while orders for non-durable goods, products such as oil and chemicals, fell by 1.5 percent.