By Jeannine Aversa
The Associated Press

WASHINGTON - America's factories saw orders for costly manufactured goods tumble in August, showing another side of the fragile economic recovery.

New orders for big-ticket "durable goods" - items expected to last at least three years - dropped by 0.9 percent last month, the first decline since April, the Commerce Department reported Thursday.

It marked a reversal from the 1.5 percent increase in orders registered in July.

The August showing, weaker than the 0.5 percent increase economists were forecasting, highlighted both the struggle of manufacturers to get back to full throttle and a tender spot for the national economy's revival.

"While the economy seems to be picking up steam, the nation's factories remain the little engines that hopefully can," said Joel Naroff, president of Naroff Economic Advisors.

In other economic news, new applications for unemployment benefits dropped last week by a seasonally adjusted 19,000 to 381,000, a seven-month low, the Labor Department said. But at least half of the drop was related to workers not being able to file jobless claims because of Hurricane Isabel, which pummeled the East Coast, a department analyst said.

Economists said the job market remains sluggish and will be the last part of the economy to show sustained improvement.

In the manufacturing report, the weakness in demand last month was fairly broad-based, with orders for cars, computers, communications equipment and machinery all going down.

Although economists were disappointed by the report, they were cautiously hopeful it will turn out to be only a temporary rough patch and that there will be improvements in orders in the coming months.

David Huether, chief economist at the National Association of Manufacturing, said the "near-term prospects for manufacturing look good" and called the drop in durable-goods orders in August "a normal correction" after sharp gains in both June and July.

The mid-August power blackout in the upper Midwest and Northeast also might have played a role in the drop, said Daniel Meckstroth, chief economist at the Manufacturers Alliance/MAPI, a research group.