New orders for long-lasting US manufactured goods rose solidly in March and bookings for the prior month were much stronger than initially thought, pointing to strength in the manufacturing sector.
The Commerce Department said today durable goods orders increased 2.5 per cent after an upwardly revised 0.7 per cent rise in February, which was previously reported as a 0.6 per cent fall.
Economists had expected a 2.0 per cent increase in March. Orders last month were buoyed by bookings for motor vehicles, transportation equipment and aircraft.
Excluding transportation, durable goods orders rose 1.3 per cent after a revised 0.6 per cent gain in February, which was previously reported as a 0.3 per cent drop. Economists had expected this category to rise 1.8 per cent.
"It's a pretty solid report. The manufacturing sector remains one of the stronger sectors in the economy while other sectors lag," said Julia Coronado, chief economist for North America at BNP Paribas in New York.
Durable goods orders are a leading indicator of manufacturing and the report indicated vibrancy in the sector, even though the economy lost some momentum in the first quarter.
Government data tomorrow is expected to show economic growth slowed to an annualised rate of 2.0 per cent or even less in the first three months of this year, held back by weak consumer spending and a bigger trade deficit. The economy grew at a solid 3.1 per cent rate in the fourth quarter.
The durable goods report came as officials at the Federal Reserve prepared to wrap up a two-day meeting on monetary policy today. The US central bank is most likely to regard the loss of growth momentum in the first quarter as temporary.
It is expected to continue with its $600 billion government bond-buying program, which ends in June, and renew its commitment to ultra low interest rate for "an extended period."
US financial markets were little moved by the durable goods report.
Outside of transportation, March orders for primary metals rose 3.9 per cent, while machinery orders jumped 4.2 per cent. However, orders for computers and electronic products, and communications equipment fell.
The Commerce Department report showed non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending, rose 3.7 per cent last month after an upwardly revised 0.5 per cent gain in February.
Economists had expected a 2.8 per cent increase from a previously reported 0.7 per cent fall.
Shipments of non-defence capital goods, excluding aircraft, rose 2.2 per cent after advancing 0.4 per cent in February. This component goes into the calculation of the the government's gross domestic product.
Reuters
