U.S. manufacturing orders rose sharply in March, in line with expectations, thanks to higher demand for commercial aircraft and automobiles.
U.S. manufacturing orders rose sharply by 1.6% month-on-month in March, in line with economists' expectations, according to a report released Thursday by the U.S. Commerce Department's Census Bureau.
Unsurprisingly, February's data was revised downwards to 1.2% from 1.4%. This is the 17th time in the last 22 months that it has been downvised.
The sharp increase in factory orders was due to a 2.6% surge in durable goods orders in March, the highest since November 2023, compared to a 0.7% increase in February.
Among them, orders for transportation equipment led the gains, soaring 7.8%. U.S. commercial aircraft orders surged 30.6% in March, following a 15.6% rise in February, according to the report. Orders for auto bodies, parts and trailers increased by 1.1 percent. Overall transport orders rose 7.8% in March after rising 1.7% in February.
Excluding the transportation sector, core factory orders rose 0.5% in March, down from 1.1% in February, while durable goods orders edged up to 0.2% from 0.1% in the previous month. Machinery orders fell 0.1 percent. Orders for computers and electronics rose 0.7 percent, while orders for electrical equipment, appliances and components remained unchanged.
In addition, shipments of manufactured goods rose 0.3 percent, compared to a 1.4 percent increase in February. Inventories remained almost unchanged, up slightly by 0.2 percent. The inventory-to-shipment ratio remained unchanged at 1.47 in March, unchanged from the previous month. Factory backlog increased by 0.4%, rebounding after two consecutive months of decline.
The government also reported a slight 0.1% increase in orders for non-defence capital goods (core capital goods) excluding aircraft in March, which is seen as a measure of the company's spending plan on equipment, rather than the previously reported rise of 0.2%. Shipments were unchanged from the 0.2% increase reported last week. According to the analysis, this shows that the capital expenditure cycle is hitting a block.
Orders for non-defense capital goods, which include aircraft, rose 5.4%, in line with expectations. Shipments were down 1.7% instead of the 1.5% reported last week.
In addition, non-durable goods orders also rose by 0.6% in March and 1.7% in February, rising for the second consecutive month. Oil and coal products led the growth in non-durable goods orders, increasing by $80 million or 1.2% to $68.7 billion.
Manufacturing accounts for 10.4% of the U.S. economy, but expansion has been limited since the Federal Reserve's aggressive interest rate hike in March 2022. The Institute for Supply Management's (ISM) survey on Wednesday showed that its manufacturing PMIs fell into contraction territory in April, after a brief rebound in March.
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