By Vicki Needham - 10/27/10 09:37 PM EDT
The report shows that the manufacturing sector, which has led the lackluster economic recovery, is still expanding but at a slower pace than earlier in the year.
Meanwhile, spending by companies on capital goods excluding aircraft dropped 0.6 percent after rising 4.8 percent in August. The category, which is a good measure of business investment in the economy, has dropped in two of the past three months.
The drop suggests that capital spending that began during the second half of last year could be slowing or ending.
Orders for communications equipment experienced the biggest drop -- 18.6 percent, while computer orders and orders for heavy machinery were each up 2 percent.
The government is expected to release third-quarter economic growth numbers on Friday, which could likely be weak, around 2 percent for July through September.