WASHINGTON – US factory orders fell 0.5% during August, the third drop in the past four months, the Commerce Department said today. Outside of transportation, however, orders increased 0.9% – the first increase since March.

In August, demand for commercial aircraft and motor vehicles declined, while bookings were up for computers and various types of electronics equipment. Strong overseas demand for US manufactured goods has helped to offset sluggish domestic consumer spending.

Overall orders were up 0.4% in July. Transportation orders fell 10.2% in August, reflecting a 40.2% drop in demand for commercial aircraft, and orders for motor vehicles and parts dropped 3.6%.

The 0.9% rise in orders excluding transportation was the first increase since a 3.8% jump in March. Orders excluding transportation had fallen 0.9% in July after declines of 0.6% in June, 1.2% in May, and 0.7% in April.

Various readings in August have allayed concerns about a new recession. Economists, however, believe economic growth will remain weak, with the gross domestic product expected to expand 2% in the second half, up only slightly from 1.7% during the June quarter.

The slow growth will not be enough to make a significant dent in the unemployment rate, which stood at 9.6% in August and is expected to creep up to 9.7% in September.

Orders for durable goods fell 1.5% in July, while demand for nondurable goods rose 0.3% after a 0.1% drop in July.

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