New orders for U.S. factory goods fell in February and business spending on capital goods was much weaker than initially thought, the latest indications that economic growth slowed further in the first quarter.

The Commerce Department said  orders for manufactured goods declined 1.7 percent as demand fell broadly, reversing January's downwardly revised 1.2 percent increase. Orders have declined in 14 of the last 19 months. They were previously reported to have increased 1.6 percent in January.

The department also said orders for non-defense capital goods excluding aircraft fell by a steeper 2.5 percent in February instead of the 1.8 percent drop reported last month. These so-called core capital goods are seen as a measure of business confidence and spending plans.

"This morning's report suggests a more sluggish manufacturing sector in the early part of the quarter," said Jesse Hurwitz, an economist at Barclays in New York.

The report added to weak consumer spending and trade data in suggesting economic growth moderated further at the turn of the year after slowing to a 1.4 percent annualized pace in the fourth quarter. Estimates for first-quarter gross domestic product growth are currently below a 1 percent rate.

U.S. government bond prices were little changed after the data, while the dollar fell to a two-week low against the yen. U.S. stocks were trading marginally lower.

Manufacturing, which accounts for about 12 percent of the economy, has been pressured by a strong dollar and weak global demand, which have undermined exports of factory goods, as well as efforts by businesses to reduce an inventory overhang.

The sector has also been slammed by investment cuts by energy firms as they adjust to reduced profits from cheaper oil.

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Reuters