Washington, DC, May 4--Orders for factory goods surged during March at a rate nearly double what analysts expected, achieving their largest gain in 20 months.
Demand for manufactured goods increased by 4.3% to $360.72 billion, after an upwardly revised 1.1% advance in February, the Commerce Department said Tuesday. February factory orders were previously estimated as rising a modest 0.3%. Non-defense factory orders had their biggest increase in 12 years, rising 4.6%
The government raised an estimate issued recently for March durable goods orders. It said demand for those goods designed to last at least three years rose by 5.0%, compared to an earlier projected 3.4% increase.
A barometer of business investment moved much higher. Non-defense capital goods excluding aircraft rose 4.5%, after going up 2.3% in February.
The 4.3% surge in overall factory orders marked the biggest advance since July 2002's 4.4%. The increase was much bigger than expected on Wall Street. Analysts had predicted data would show overall demand went up 2.3% in March.
The positive reading on manufacturing comes a day after a private research group released further evidence the sector continues growing. The Institute for Supply Management on Monday said its index of manufacturing activity expanded for an 11th straight month in April to 62.4, compared with 62.5 in March. Any reading above 50 indicates a growing factory sector.
Tuesday's Commerce Department report showed a broad-based increase for factory orders.
Non-durable goods orders rose 3.5% after dropping 1.8% in February. Consumer-goods orders climbed by 3.4% after decreasing 0.4% in February -- while consumer durable-goods orders were up by 3.7%, consumer non-durables rose 3.3%.
Demand for transportation-related goods increased by 4.1%, after rising 11.0% the month prior. Non-defense aircraft and parts orders jumped 12.6%. Defense aircraft orders tumbled 27.7%. Demand for cars and parts advanced 4.8%. Orders for ships and boats fell 24.3%.
Excluding transportation orders, overall factory orders would have gone up 4.4%.
Defense capital-goods orders declined by 7.1% in March. And without taking into account defense orders, overall factory orders would have gone up 4.6% -- the biggest rise since March 1992's 5.0%.
Demand for all non-defense capital goods -- business equipment meant to endure at least 10 years -- increased by 4.2%.
Orders for computers and electronic products rose by 2.5%. Primary metals went up 9.2%; machinery orders increased 4.1% and electrical equipment and appliances rose 0.6%.
Factory shipments went up by 3.8%. Unfilled orders rose 1.2%. Factory inventories increased by 0.3%.
