Orders to U.S. factories climb on demand for autos, planes

Orders placed with U.S. factories increased in February, boosted by a pickup in demand for motor vehicles and commercial aircraft.

The 3% gain in bookings, the biggest in five months, followed a revised 1% decline in January, a Commerce Department report showed today in Washington. The median forecast of 64 economists in a Bloomberg survey called for a 2.9% rise. The advance was led by a 5.6% surge in demand for durable goods that was little changed from the 5.7% estimate issued last week.

Auto sales that are on pace for the best year since 2007 and gains in home construction are helping drive sales and orders at manufacturers such as 3M Co. and H.B. Fuller Co. More corporate investment and inventory rebuilding are also keeping assembly lines busy, contributing to economic growth as businesses look beyond federal budget cuts.

“Business spending will have another good year,” said Nigel Gault, chief U.S. economist for IHS Global Insight in Lexington, Massachusetts. “There’s demand here in the U.S., and some return of export growth.”

Stocks held earlier gains after the report. The Standard & Poor’s 500 Index rose 0.6% to 1,571.33 at 10:04 a.m. in New York.

Estimates in the Bloomberg survey ranged from gains of 0.8% to 4.5%. The Commerce Department revised the January figure from a previously reported drop of 2%.

ISM Report

A report yesterday signaled factories took a breather in March to assess the impact of the automatic federal government spending cuts, or sequestration, which took effect at the start of the month.

The Institute for Supply Management’s factory index fell to 51.3 in March from an almost two-year high of 54.2 in February, the Tempe, Arizona-based group reported yesterday. A reading of 50 is the dividing line between growth and contraction.

“There is concern that sequestration will weigh on some sectors,” Josh Dennerlein, an economist at Bank of America Corp. in New York, said before the report. Over the longer term, “autos and housing are really kicking in. That feeds into the rest of the economy.”

Today’s report showed factory orders excluding transportation equipment climbed 0.3% after a 2% increase the prior month.

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