New orders for manufactured goods fell in June for the second straight month, the Commerce Department said Tuesday in a report that indicated slowing economic growth.

Factory orders dropped by 1.2 percent due to lower demand for steel, construction machinery and aircraft, the Commerce Department said. The agency also revised May's decline, originally reported at 1.4 percent, to 1.8 percent.

The two months of declines follow nine straight months of increases that buoyed freight shipments. Manufacturers increased production last fall as the economy was coming out of recession.

Shippers and carriers have been watching data on manufacturing, inventories, housing and unemployment for clues to volumes during the rest of the year.

The Commerce Department said manufacturers’ inventories decreased 0.1 percent after an 0.4 percent decrease in May but that the inventories-to-shipments ratio was unchanged at 1.26.

The Institute for Supply Management’s manufacturing index released Monday reported that U.S. manufacturing grew for the 12th straight month in July, but at a slower pace.

Other data released Tuesday also showed the economy's momentum slowed at the end of the second quarter. Consumer spending was flat in June and personal incomes also remained level, the government said.

The National Association of Realtors says its seasonally adjusted index of contracts for previously occupied homes dipped 2.6 percent in June to a reading of 75.7. That was the lowest on records dating back to 2001 and down nearly 19 percent from a year earlier.

Last week, the government said the economy grew at a 2.4 percent annual rate in the April-June quarter, down from a 3.7 percent pace in the first quarter.

One bright spot in the factory orders report is that business spending on capital goods such as machinery grew in June by 0.2 percent. But that was down from a previous estimate of 0.6 percent.

Aircraft orders, a volatile category, fell by 25.6 percent in June, the Commerce Department said. Excluding the transportation sector, orders fell by 1.1 percent.

The aircraft figures could be distorted by seasonal adjustment. Boeing says on its Web site that it booked orders for 49 airplanes in June, after only five orders in May and 34 in April.

But the government expects a large number of aircraft orders in the summer, so the impact of the increase is lessened after seasonal adjustment.

Orders for new construction machinery plummeted by 23.2 percent, after rising sharply in May. Iron and steel mill orders dropped 3.4 percent.

Orders for durable goods -- big-ticket items meant to last at least three years -- also fell by 1.2 percent in June, a steeper drop than the 1 percent decline reported last month.

Demand for nondurable goods such as food, clothing and chemical products fell by 1.3 percent, the Commerce Department said. Much of that decline was driven by lower spending on oil and coal, which partly reflects the impact of a drop in oil prices.

Source: JOC