Orders to U.S. factories fell in August from July, mostly because of a sharp drop in volatile aircraft orders. The decline offset an increase in orders that reflect corporate investment plans.
The Commerce Department said Thursday that factory orders dropped 5.2 percent in August, the biggest decline in more than three years. The loss was largely because demand for commercial aircraft plunged 102 percent. That pulled down orders for long-lasting manufactured goods by 13.2 percent.
On a positive note, orders for business equipment and software, often considered a proxy for investment plans, rose 1.1 percent, after two steep declines. Still, orders for steel, electrical equipment and industrial machinery all fell.
Orders for non-durable goods, which include food, clothing and gasoline, rose 2.2 percent. The increase mostly reflected higher gas prices.
Fed directs stimulus at mortgage bonds
The Federal Reserve structured its latest stimulus program around the purchase of mortgage bonds after members agreed that helping a nascent housing recovery was a good way to lift the broader economy.
Minutes of the Fed’s Sept. 12-13 meeting released Thursday also show that most members now agree that tying a future increase in short-term interest rates to economic measures, such as a specific unemployment rate, could be effective. But members agreed to hold off on the change to work out the details.
After the meeting, the Fed said it would keep buying mortgage bonds until the job market showed substantial improvement.
The Fed also extended its plan to keep its benchmark short-term interest rate near zero until mid-2015 and left open the possibility of taking other steps.
The Fed has already purchased more than $2 trillion in bonds since the 2008 financial crisis. The latest program seeks to spend $40 billion a month to buy mortgage bonds without an end date set.
World food prices hit six-month high
World food prices rose in September to the highest point in six months as dairy and meat producers passed on higher feed costs to consumers, the United Nations’ Food and Agriculture Organization said Thursday.
An index of 55 food items tracked by the FAO rose to 215.8 points from a restated 212.8 points in August, the Rome-based agency reported on its website. Dairy costs jumped the most in more than two years.
Livestock breeders and dairy farmers are passing on the higher cost of feed, after grain prices jumped in June and July, according to Abdolreza Abbassian, an economist at the FAO in Rome. Higher prices don’t mean a food crisis is imminent, he said.
820,000 Civics, Pilots recalled for wiring
Honda says it is recalling more than 820,000 Civic compact cars and Pilot SUVs because the headlights can fail.
The recall affects Civics from the 2002 and 2003 model years and Pilots from 2004 and 2005.
The company says wires connecting a switch that controls the headlights and turn signals can overheat and melt, knocking out the low-beam headlights.
No crashes or injuries have been reported from the problem.
Honda says it will fix the wiring for free. The company began sending notices to owners in late September.