Factory orders drop 4%

Government data show orders to U.S. factories plunged by the largest amount in nearly two years as the credit strains are hitting manufacturing with full force.

The Commerce Department reported Thursday that orders for manufactured goods dropped by 4% in August, compared to July. That's a much worse performance than the 2.5% decline that economists had expected. It was the biggest setback since a 4.8% plunge in October 2006.

The weakness was led by big declines in orders for aircraft, down 38.1%, and autos, which fell by 10.6%, the worst performance in nearly six years.