April 24 (Bloomberg) -- Orders placed with American factories for durable goods such as cars and computers rose more than forecast in March, pointing to faster production that will help spur the economy.
Bookings for goods meant to last at least three years increased 2.6 percent, the biggest gain since November, after rising 2.1 percent in the prior month, a Commerce Department report showed today in Washington. The median forecast of economists surveyed by Bloomberg called for a 2 percent advance. Orders excluding transportation equipment, which is often volatile, rose by the most in more than a year.
The biggest increase in computers and electronics orders since November 2010 highlighted a broad-based pickup in demand that will help the economy rebound after a weather-plagued first quarter. More business investment and improvement in some global markets will benefit manufacturers such as United Technologies Corp. and Honeywell International Inc.
“Manufacturing is going to expand slowly but surely,” Ryan Sweet, senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “The economy is going to lean on consumer spending and business investment for growth in coming months.”
Estimates of the 77 economists in the Bloomberg survey ranged from a 0.2 percent decline to a 3.6 percent gain after a previously reported 2.2 percent increase in February.
Another report today from the Labor Department showed initial jobless claims jumped 24,000 last week to 329,000.
Orders for non-defense capital goods excluding aircraft, a proxy for future business investment in items like computers, engines and communications gear, increased 2.2 percent. It was the biggest gain in four months and followed a revised 1.1 percent drop that was smaller than previously estimated.
Producers of computers and electronics received 5.7 percent more orders in March than a month earlier, the biggest advance since November 2010. Orders for metals, machinery, electrical equipment and appliances also picked up.
Capital goods demand increased at a 3.1 percent annualized rate in the first three months of the year, compared with a 1.9 percent gain the fourth quarter.
Shipments of those goods, used in calculating gross domestic product, climbed 1 percent in March after rising 0.7 percent, more than previously estimated. Sales rose at a 1.7 percent annualized rate in the first quarter, down from 7.8 percent in the final three months of 2013, indicating business spending cooled.
The durable goods data were boosted by an 8.6 percent surge last month in bookings for non-military aircraft, according to the Commerce Department’s report. Boeing Co., the Chicago-based aerospace company, said it received orders for 163 commercial aircraft in March, up from 74 in the previous month.
Orders for motor vehicles and parts climbed 0.4 percent after a 4.3 percent gain in February. Cars and light truck sold at a 16.3 million annualized rate in March, the fastest since May 2007, according to data from Ward’s Automotive Group. General Motors Co., Ford Motor Co., Toyota Motor Corp., and Chrysler Group LLC topped analysts’ estimates for March sales.
Companies getting a boost from stronger overseas markets include United Technologies, the maker of Pratt & Whitney jet engines and Otis elevators, which this week raised the lower end of its 2014 earnings forecast after beating analysts’ first- quarter profit estimates.
“We’re feeling pretty good about the economies,” Greg Hayes, chief financial officer of the Hartford, Connecticut- based company, said in an April 22 telephone interview. “Europe seems to be coming out of the doldrums and the U.S. is performing about as expected.”
Morris Township, New Jersey-based Honeywell increased the low end of its 2014 earnings forecast, after reporting a first- quarter profit that topped analysts’ estimates, as turbocharger sales benefited from a European auto rebound and U.S. growth spurred demand at its control-products unit.
Reports this month showed the manufacturing expansion accelerated in March, driven by gains in production and orders, as the economy shook off its winter doldrums. The Institute for Supply Management’s index advanced to 53.7 from 53.2 a month earlier, the Tempe, Arizona-based group said on April 1.
The improvement in the economy and job market helps explain why the Federal Reserve is trimming its monthly asset purchases even as it holds the target interest rate near zero. Eight of 12 Fed districts characterized growth as “modest or moderate,” the central bank said on April 16 in its Beige Book business survey. Policy makers will meet next week to discuss monetary policy.