New data released by the Commerce Department’s Census Bureau has revealed a significant uptick in new orders for U.S.-manufactured goods in March. The boost was driven primarily by strong demand for commercial aircraft and motor vehicles, although gains in other sectors were more moderate.
The report indicates that factory orders rose by 1.6% in March, following a 1.2% increase in February, in line with economists’ expectations. Year-on-year, orders saw a 0.3% increase in March. Excluding the transportation sector, orders increased by 0.5% during the same period.
Despite these positive trends, the manufacturing sector, which represents 10.4% of the U.S. economy, continues to face challenges. The industry has been constrained by a series of interest rate hikes by the Federal Reserve, totalling 525 basis points since March 2022. A recent survey by the Institute for Supply Management showed a contraction in the manufacturing Purchasing Managers’ Index (PMI) in April, following a brief uptick in March.
In March, orders for commercial aircraft surged by 30.6%, following a 15.6% increase in February. Orders for motor vehicle bodies, parts, and trailers also saw a notable uptick of 1.1%. Overall transportation orders increased by 7.8%, compared to a 1.7% climb in February.
However, not all sectors experienced growth. Machinery orders slipped by 0.1%, while orders for computers and electronic products rose by 0.7%. Orders for electrical equipment, appliances, and components remained unchanged.
Shipments of manufactured goods rose by 0.3% in March, while inventories remained unchanged. Unfilled orders at factories increased by 0.4% during the same period.
The report also highlighted that orders for non-defense capital goods excluding aircraft, a key measure of business spending on equipment, edged up by 0.1% in March, slightly lower than the previously reported 0.2% increase. Shipments of these core capital goods remained unchanged, compared to the earlier reported 0.2% gain.
Despite these fluctuations, business spending on equipment showed signs of recovery in the first quarter of the year, following two consecutive quarters of contraction. This rebound is expected to contribute positively to the gross domestic product (GDP) report, as these shipments factor into the calculation of business spending on equipment.
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