Updated March 24 at 3:24pm

Orders to U.S. factories climb on demand for autos, planes


WASHINGTON - Orders placed with U.S. factories increased in February, boosted by a pickup in demand for motor vehicles and commercial aircraft.

The 3 percent gain in bookings, the biggest in five months, followed a revised 1 percent decline in January, a Commerce Department report showed today in Washington. The median forecast of 64 economists in a Bloomberg survey called for a 2.9 percent rise. The advance was led by a 5.6 percent surge in demand for durable goods that was little changed from the 5.7 percent estimate issued last week.

Auto sales that are on pace for the best year since 2007 and gains in home construction are helping drive sales and orders at manufacturers such as 3M Co. and H.B. Fuller Co. More corporate investment and inventory rebuilding are also keeping assembly lines busy, contributing to economic growth as businesses look beyond federal budget cuts.

“Business spending will have another good year,” said Nigel Gault, chief U.S. economist for IHS Global Insight in Lexington, Massachusetts. “There’s demand here in the U.S., and some return of export growth.”

Stocks held earlier gains after the report. The Standard & Poor’s 500 Index rose 0.6 percent to 1,571.33 at 10:04 a.m. in New York.

Estimates in the Bloomberg survey ranged from gains of 0.8 percent to 4.5 percent. The Commerce Department revised the January figure from a previously reported drop of 2 percent.

ISM report

A report yesterday signaled factories took a breather in March to assess the impact of the automatic federal government spending cuts, or sequestration, which took effect at the start of the month.

The Institute for Supply Management’s factory index fell to 51.3 in March from an almost two-year high of 54.2 in February, the Tempe, Arizona-based group reported yesterday. A reading of 50 is the dividing line between growth and contraction.

“There is concern that sequestration will weigh on some sectors,” Josh Dennerlein, an economist at Bank of America Corp. in New York, said before the report. Over the longer term, “autos and housing are really kicking in. That feeds into the rest of the economy.”

Today’s report showed factory orders excluding transportation equipment climbed 0.3 percent after a 2 percent increase the prior month.

Durable goods

Bookings for durable goods, those meant to least at least three years, make up just over half of total factory demand. In addition to planes and autos, demand improved for primary metals and electrical equipment including appliances.

Demand for commercial aircraft, which is often volatile, jumped 95.1 percent in February after dropping 23.8 percent a month earlier. Boeing Co., the Chicago-based aerospace company, said it received orders for 179 aircraft in February, up from two in January.

Orders for non-durable goods including petroleum, issued for the first time today, increased 0.8 percent. These bookings often reflect changes in commodity prices as the figures aren’t adjusted for inflation.

Bookings for capital goods excluding aircraft and military equipment, a measure of future business investment, fell 3.2 percent after increasing 6.7 percent the prior month, the biggest gain since March 2010. They were initially estimated to have dropped 2.7 percent in February, according to data issued last week.

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