Wednesday, May 4, 2011

Factory Orders Up, Showing Strength In Key Sector

U.S. businesses increased their demand for industrial machinery, computers and autos in March, lifting factory orders for the fifth consecutive month.

Orders rose 3 percent in March after a 0.7 percent increase in February, the Commerce Department reported Tuesday. A key category that signals business investment plans jumped 4.1 percent after a small increase in February and a big decline in January. Excluding the volatile transportation sector, orders rose 2.6 percent.

The March increase pushed total orders to $462.9 billion, up 31.2 percent from the recession low hit in March 2009.

Analysts noted that the March increase was partly driven by higher oil prices that increased the costs of petroleum products.

But the report also supported evidence that the manufacturing sector has been one of the strongest segments of the economy since the recession ended nearly two years ago. On Monday, the Institute for Supply Management reported that manufacturing activity rose for a 21st straight month in April.

Joshua Shapiro, chief U.S. economist at MFR Inc. in New York, said the solid March increase in factory orders showed the January-March quarter ended with momentum, an encouraging sign for future economic growth.

A weak dollar is making U.S. exports cheaper overseas and tax cuts are encouraging business investment in capital goods.

For March, orders for durable goods items expected to last at least three years rose 2.9 percent. That's slightly better than a preliminary estimate the government reported last week.

Demand for nondurable goods rose 3.1 percent. Petroleum products increased 7.8 percent. Much of that gain reflected higher prices.

Orders for transportation rose 6.2 percent. Demand for autos increased 4 percent, nearly double the 2.2 percent rise in February. Automakers are benefiting from rising sales over the past several months.

Orders for commercial aircraft rose 0.9 percent after much bigger increases in the previous two months.

Source: http://www.npr.org/2011/05/03/135956134/factory-orders-up-showing-strength-in-key-sector?ft=1&f=1006

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