WASHINGTON, Oct. 2 (Xinhua) -- New orders for manufactured goods to America's factories plunged by 4 percent in August, the biggest amount since October 2006, the Commerce Department reported Thursday.

    The big drop came after factory orders had increased for five consecutive months and followed a 0.7 percent gain in July. Analysts were expecting a decline of 2.5 percent for August.

    In August, demand for durable goods, big-ticket items expected to last at least three years such as computers, cars and machinery, declined by 4.8 percent in August, compared to an increase of 0.7 percent in July.

    Orders for transportation equipment, which account for more than a quarter of total durable goods demand, plunged 9.1 percent, in contrast to an increase of 2.7 percent in the previous month.

    Excluding volatile transportation products, overall factory orders would have fallen by 3.3 percent, following a 0.5 percent gain in July.

    Orders for nondurable goods, including food, paper products, petroleum and coal products, were down 3.3 percent in August after a 0.8 percent advance in July.

    The report also showed that factory shipments, considered a good indication of current demand, dropped by 3.5 percent in August after having gained 1.4 percent in the previous month.

    The inventories-to-shipments ratio was 1.26 in August, up from 1.21 in July. The ratio is a measure of how long it would take to deplete stocks at the current sales pace.

    The dismal report on factory orders for August followed a report Wednesday from the Institute for Supply Management showing that the nation's manufacturing activity fell to the lowest level since October 2001.