Orders to U.S. factories for manufactured goods fell 1.7 percent in January, their third consecutive decline after peaking last October, the government said.

The Commerce Department reported that orders for durable and non-durable goods fell to $230.6 billion following a revised 0.5 percent drop a month earlier. Orders originally were reported unchanged in December.The report said orders had fallen each month since reaching a high in October of $250.1 billion, including a 5.8 percent drop in November, the largest one-month plunge on record.

Both durables and non-durables orders contributed to the January decline.

Factory orders are a key economic barometer of manufacturing industry plans for production. A decrease often forecasts a slump in that sector and future layoffs.

In fact, the Labor Department reported earlier that factory payrolls fell by 69,000 in January, bringing manufacturing job losses since January 1989 to 900,000.

However, the National Association of Purchasing Management said last week that its index of business activity indicated the recession may be ebbing.

Its index rose to 38.5 percent in February from 37.7 percent in January, but was still below the 44 percent level at which the association considers the overall economy to be in a decline.

Still, the decline in orders for durable goods - items ranging from cars to computers expected to last more than three years - was twice as bad in January as first reported last week.

Durable goods orders were revised to a 1.8 percent drop, to $117.8 billion, from the 0.7 percent decline first reported.

Commerce attributed most of the drop to decreased orders for electrical machinery and transportation equipment.