March surge in factory orders a good sign

WASHINGTON - Orders to U.S. factories surged in March by the largest amount in a year, an encouraging sign that the recent slowdown in manufacturing may be ending.

The Commerce Department said yesterday that factory orders rose 3.1 percent in March, pushed higher by a big jump in demand for commercial aircraft and the biggest rise in the category that tracks business investment in new equipment in 21/2 years.

The overall increase was far better than the 2 percent figure analysts had been expecting and offered hope that manufacturers were beginning to experience rising demand after a recent weak period brought on by troubles in housing and auto sales.

The good news on factory orders followed a report on Tuesday from the Institute for Supply Management that its closely watched gauge of manufacturing activity rose to 54.7 in April, the best showing in 11 months.

The improving data have prompted some economists to say that the worst of the manufacturing slump may be ending.

For March, the government said orders for big-ticket durable goods - products expected to last at least three years - rose 3.7 percent, even better than a preliminary report last week that had put the increase at 3.4 percent.

Orders for nondurable goods, items such as petroleum and chemicals, rose 2.3 percent, the biggest gain since January 2006.

Michelle Girard, an economist with RBS Greenwich Capital, said much of the surge in nondurable goods reflected a rise in petroleum prices. But she said even when this factor was removed, nondurable goods still rose at the fastest pace since October.

"The underlying data appear to corroborate other indicators . . . that the manufacturing sector may have stabilized," she said.

The March gain pushed total orders to $400.2 billion on a seasonally adjusted basis.

The increase was led by a 38.1 percent surge in demand for commercial aircraft. Orders for primary metals and industrial machinery also were strong. The category of nondefense capital goods excluding aircraft, which is seen as a proxy for business-investment plans, rose 4.8 percent in March, the best showing in 21/2 years.

However, demand for household appliances and furniture both fell, indicating continued troubles in the housing industry.