(Bloomberg) -- Orders placed with U.S. factories for business equipment rose by the most in eight months in March as a broader measure also saw surprising strength, signs corporate investment is regaining its footing despite trade war uncertainty.
A proxy for business investment -- non-military capital goods orders excluding aircraft -- rose 1.3 percent after the prior month was revised to a gain from a loss, according to Commerce Department figures Thursday that topped all estimates in Bloomberg's survey. The broader measure of bookings for all durable goods, or items meant to last at least three years, rose 2.7 percent, a seven-month high and more than projected.
Key Insights
- The improvement in equipment orders signals manufacturers are seeing stable demand, which should contribute to a still-solid pace of economic growth in the first quarter. At the same time, companies must contend with larger inventories heading into the second quarter, a factor expected to boost gross domestic product in the short-term but weigh on it later.
- The boost in the broader orders gauge was led by demand for both civilian and military aircraft, along with the biggest gain for communications equipment since 2015. Separate data showed Boeing (NYSE:BA) Co.’s aircraft orders rebounded in March.
- Some figures used to calculate gross domestic product were mixed: Shipments of non-military capital goods excluding aircraft fell 0.2 percent, missing forecasts for a gain, after an upwardly revised 0.2 percent rise the prior month.
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- Orders and shipments for primary metals both fell 0.2 percent.
- The Commerce Department figures showed the three-month annualized gain for business-equipment shipments increased 4.2 percent while orders rose 2.1 percent after a decline in February, indicating an upswing of momentum.
- Excluding transportation-equipment demand, which tends to be volatile, orders rose 0.4 percent following two straight declines. Defense capital-goods orders rose 7.4 percent.
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