Orders for U.S. durable goods fell in January by the most in three years, led by a slowdown in demand for commercial aircraft and business equipment.

The expiration at the end of 2011 of a tax incentive allowing full depreciation on equipment purchases may have prompted a slowdown in investment at the start of this year. At the same time, a strengthening auto industry may help keep factories at the forefront of the expansion that began in June 2009.

“The expected weakness may not last, as the weak start to the quarter has tended to give way to a stronger end over the last 2 1/2 years since the recession ended,” Jonathan Basile, a senior economist at Credit Suisse in New York, said in an e-mail.

Last month’s decrease in capital goods orders extends a pattern of declines early in a quarter that are typically reversed later. Demand for non-military capital goods like computers, engines and communications gear have dropped in the first month of a quarter in all but three instances since the end of 2005.

Stock-Index Futures

Stock-index futures erased gains after the figures, with the contract on the Standard & Poor’s 500 Index expiring next month falling less than 0.1 percent to 1,367.2 at 9 a.m. in New York.

Estimates of 80 economists surveyed by Bloomberg ranged from a drop of 4.3 percent to an increase of 1.5 percent.

Orders for durables excluding transportation equipment decreased 3.2 percent, the most since October 2010, after a 2.1 percent rise.

Demand for transportation equipment fell 6.1 percent, restrained by a 19 percent plunge in civilian aircraft orders. Boeing Co., the largest U.S. aircraft maker, said it received 150 orders last month, down from 287 in December.

Bookings for automobiles and parts increased 0.9 percent in January after 1.1 percent rise the previous month.

Cars and light trucks sold at a 14.1 million annual rate last month, according to industry data. Excluding a surge in August 2009 tied to the government’s “cash-for-clunkers” program, it was the strongest month since May 2008.

Capital Goods

Today’s report showed bookings for non-defense capital goods excluding aircraft, a proxy for business investment in items such as computers, engines and communications gear, decreased 4.5 percent, the most in a year.

Orders slumped 10.4 percent for machinery, the most in three years, and primary metals demand dropped 6.7 percent.

“Core capital goods -- a good proxy for business capital spending -- which surged toward year-end to take advantage of the expiring full depreciation allowance, are expected to push higher still as an improving economic environment prompts businesses to invest,” said Benjamin Reitzes, a senior economist at BMO Capital Markets in Toronto.

Shipments of non-defense capital goods excluding aircraft, used in calculating gross domestic product, decreased 3.1 percent, the most since April 2009, after rising 2.8 percent.

End of 2011

Orders for business equipment jumped 3.4 percent in December as some companies rushed to qualify for a government tax credit that expired at the end of 2011 and allowed for 100 percent depreciation on equipment purchases. The allowance this year is 50 percent.

“Durables have had pretty much had a V-shaped recovery in the United States,” James McGill, chief human resource officer at Eaton Corp. (ETN), said in a Feb. 24 conference call with analysts. “The good news here is that this has been sustained primarily by growth in capital goods. We think that gives us some traction, some confidence in expecting that the recovery will continue into 2012.”

The report showed unfilled orders for durable goods increased 0.5 percent. Unfilled orders for non-defense capital goods minus aircraft also climbed 0.5 percent after a 1 percent increase that shows demand may be sustained in coming months.

The Federal Reserve gauge of factory output expanded 0.7 percent in January after surging 1.5 percent a month earlier, the best two-month performance since July and August 2009, when the world’s largest economy was emerging from recession.

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net