Orders for U.S.-made manufactured goods unexpectedly fell in February, led by the biggest slump ever in purchases of machinery, which indicates companies are becoming more hesitant to invest as the economy heads into a recession, Bloomberg reported.

The 1.7 percent drop followed a 4.7 percent decrease in the prior month, the Commerce Department said today. Excluding orders for transportation equipment, which tend to be volatile, bookings fell 2.6 percent, the most since January 2007.

Businesses are cutting back on equipment purchases as the biggest housing downturn in a quarter-century hurts sales, and rising fuel costs erode profits. Improving demand from overseas is the only thing preventing manufacturing from declining even more.

Economists projected orders would increase 0.7 percent, according to the median of 69 forecasts in a Bloomberg News survey, after a previously reported 5.3 percent slump in January. Estimates ranged from an increase of 3 percent to a 1 percent drop. Excluding transportation equipment, economists forecast orders to fall 0.3 percent after a drop of 1.6 percent.

Sales of durable goods, those made to last several years, were down 2.8 percent in February, the most since September 2006. A 31 percent drop in shipments of semiconductors led the decline.