U.S. Factory Orders Rebounded in March

Tag: electronic machinery

Factory orders recovered in March, surging beyond expectations, but a key barometer of capital spending by businesses fell again, suggesting firms are nervous about the economy in the future.

Orders for manufactured goods increased 1.4%, following a revised 0.9% drop in February, the Commerce Department said Friday. Originally, factory orders were seen 1.3% lower in February.

Economists forecast factory goods orders 0.3% higher in March.

Demand for durable goods, expensive things designed to last at least three years, increased in March, up 0.1%. Last week, Commerce, in an early estimate, said durables in March fell 0.3%.

The Institute for Supply Management on Thursday reported its April manufacturing index held steady at 48.6. Numbers under 50 indicate contractionary activity. The ISM report is a key piece of data on the manufacturing sector. A trade group, the Manufacturers Alliance/MAPI, said the below-par reading confirms the manufacturing recession continues but added the severity of the downturn is on the mild side.

Factory orders in March for non-defense capital goods orders excluding aircraft decreased 1.0%, after sliding by 1.2% in February. Those bookings are seen as a yardstick for capital spending by businesses.

Non-durable goods factory orders rose in March by 2.6%, after decreasing 1.1% in the prior month.

Orders for goods made in the transportation sector decreased 3.2%, after rising 3.2% in February. Non-military aircraft and parts orders rose 6.6%, after increasing 5.9% in February. Defense aircraft and parts orders rose 31.9%, after rising 8.5% in February. Ships and boats dropped 23.4%, after surging 70.7% in February. Orders for motor vehicle bodies and parts increased 1.4%, after falling 2.5% in February.

Excluding transportation orders, overall factory orders increased 2.2%, after falling 1.5% in February.

Capital goods orders decreased 0.1%, after rising 0.4% in February.

Defense capital-goods orders decreased 5.5%, after rising 0.4% in February. Without defense orders, overall factory orders increased 1.4%, after slipping 1.1% in February. Defense capital goods industries include, among others, communications equipment, aircraft and missiles.

Demand for all non-defense capital goods - business equipment meant to last 10 years or more - increased 0.6%, after rising 0.4% in February.

Consumer-goods orders increased 1.9%, with consumer durable goods orders down 5.6% and consumer non-durables 3.6% higher.

Orders increased in March by 3.2% for fabricated metals, 6.4% for machinery, 0.9% for computers and electronic products, and 0.5% for primary metals. Orders fell 6.2% for electrical equipment.

The report showed factory shipments increased 1.1%. Unfilled orders, a sign of future demand, were 1.1% higher. Inventories of manufacturers increased 0.9% in March.