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The Census Bureau said Tuesday that new orders for durable goods unexpectedly fell 0.5% to $209.7 billion in August.

Economists had expected durable goods orders to rise 0.4%. The second consecutive monthly decline follows a revised 2.7% drop in July and is the first back-to-back decline since 2003.

Excluding transportation, new orders for durable goods fell 2% for the month. Computers and electronic products sported the largest fall in new orders, down 4.7% to $29.5 billion.

Ian Shepherdson, chief economist with High Frequency Economics, also said "that July orders ex-transportation were revised down by 0.5%, so the report is even worse than it first appears."

Shipments of manufactured durable goods rose 1.9% to $214.2 billion in August and is now up three times in the last four months. Unfilled orders for goods rose 0.4% to $631.9 billion, the highest level since the series began.

Meanwhile, inventories of manufactured durable goods rose 0.2% to $287.1 billion, its seventh rise in the last eight months.

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The durable goods report comes almost a week after the

Federal Reserve

Bank of Philadelphia released its monthly manufacturing index, which was considerably softer than had been forecast. The survey registered a reading of minus 0.4 compared with the expectation of about 13.

"In the wake of the big drop in the Philly Fed these data make it easy to make the case that industry is faltering," said Shepherdson. "Even though this would be very helpful to our forecasts of aggressive

Federal Reserve

easing and sharply lower yields, we are cautious."