U.S. Factory Orders Up

U.S. Factory Orders Rise More Than Forecast in March

Orders placed with U.S. factories rose more than forecast in March, reinforcing signs in the past week that business investment was on the mend going into the second quarter.

Factory orders rose 3.1 percent, the most in a year, after increasing 1.4 percent in February, the Commerce Department said today in Washington. Excluding transportation equipment, bookings rose 1.9 percent after no change in February.

Orders rose for goods such as machinery, power generation equipment and commercial aircraft, while higher energy costs boosted the value of chemicals and other non-durable products. The Federal Reserve, forecasting improved second-half growth, is counting on a bigger contribution from business spending as housing remains in a slump and consumer spending weakens.

``Business investment looks like it picked up at the end of the first quarter, leaving good momentum for the current quarter,'' Jonathan Basile, an economist at Credit Suisse in New York, said in an interview. ``The Fed will be encouraged by the improvement, given that business spending has been a concern.''

Business Payrolls

Earlier, a private report showed U.S. companies added the fewest jobs in almost four years in April. The 64,000 increase in business payrolls was the smallest since July 2003 and followed a revised gain of 98,000 in March that was smaller than previously reported, the ADP Employer Services report showed today. The report is based on data from 364,000 businesses with about 22 million workers on their payrolls.

Economists expected factory orders to rise 2.2 percent in March after a previously reported 1 percent increase the month before, according to the median of 65 estimates in a Bloomberg News survey. Forecasts ranged from 0.5 percent to 5 percent.

Orders for durable goods, which make up about 55 percent of factory demand, rose a revised 3.7 percent after a 2.3 percent increase in February. The government last month reported a 3.4 percent rise in durables orders for March.

Orders for capital goods excluding aircraft and military equipment, a measure of future business investment, increased 4.8 percent after a decline of 2.4 percent. The Commerce Department had previously estimated a 4.7 percent gain. Shipments of these goods, which are used by the government in its calculation of gross domestic product, rose 0.6 percent after declining 0.1 percent.