Washington: New orders for long-lasting US manufactured goods rose solidly in March 2011 and bookings for the prior month were much stronger than initially thought, pointing to strength in the manufacturing sector.
The Commerce Department said on Wednesday durable goods orders increased 2.5% after an upwardly revised 0.7% rise in February, which was previously reported as a 0.6% fall.
Economists had expected a 2.0% 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% after a revised 0.6% gain in February, which was previously reported as a 0.3% drop. Economists had expected this category to rise 1.8%.
“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 on Thursday is expected to show economic growth slowed to an annualized rate of 2.0% 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% 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 on Wednesday. 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%, while machinery orders jumped 4.2% . However, orders for computers and electronic products, and communications equipment fell.
The Commerce Department report showed non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rose 3.7% last month after an upwardly revised 0.5% gain in February.
Economists had expected a 2.8% increase from a previously reported 0.7% fall.
Shipments of non-defense capital goods, excluding aircraft, rose 2.2% after advancing 0.4% in February. This component goes into the calculation of the the government’s gross domestic product.