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US factory orders increase solidly in February

Published 04/02/2024, 10:44 AM
Updated 04/02/2024, 10:45 AM
© Reuters. FILE PHOTO: Matt Dillion and Chad Damron weld an upper deck assembly at Look Trailers cargo trailer manufacturing facility in Middlebury, Indiana, U.S., April 1, 2021. REUTERS/Eileen T. Meslar/File Photo

WASHINGTON (Reuters) - New orders for U.S.-manufactured goods rebounded more than expected in February, boosted by demand for machinery and commercial aircraft as manufacturing regains its footing.

Factory orders increased 1.4% after dropping 3.8% in January, the Commerce Department's Census Bureau said on Tuesday. Economists polled by Reuters had forecast orders rebounding 1.0%. They rose 1.0% year-on-year in February.

Manufacturing, which accounts for 10.4% of the U.S. economy, has turned the corner after struggling in the aftermath of 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022. A survey from the Institute for Supply Management on Monday showed its manufacturing PMI rising above the 50 mark in March for the first time since September 2022.

Commercial aircraft orders increased 24.6% in February after slumping 63.5% in the prior month. Orders for motor vehicle bodies, parts and trailers rose 0.3%. Overall transportation orders rebounded 3.3% after tumbling 18.3% in January.

Machinery orders increased 1.8%, lifted by a 12.5% surge in mining, oil field and gas field machinery. There were also increases in orders for fabricated metal products and primary metals. But orders for computers and electronic products declined 1.4%, while those for electrical equipment, appliances and components decreased 2.1%.

Shipments of manufactured goods increased 1.4%, while inventories rose 0.3%. Unfilled orders at factories were unchanged for a second straight month.

The government also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, rose by an unrevised 0.7% in February. Shipments of these so-called core capital goods declined 0.6% instead of 0.4% as reported last week.

© Reuters. FILE PHOTO: Matt Dillion and Chad Damron weld an upper deck assembly at Look Trailers cargo trailer manufacturing facility in Middlebury, Indiana, U.S., April 1, 2021. REUTERS/Eileen T. Meslar/File Photo

Nondefense capital goods orders rebounded 4.3% instead of 4.4% as initially estimated. Shipments of these goods increased 2.6% instead of 2.7% as reported last week.

These shipments go into the calculation of the business spending on equipment component in the gross domestic product report. Business spending on equipment has contracted in four of the last five quarters.

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