New factory orders post largest gain in eight months in March

Washington

NEW orders for US factory goods recorded their biggest increase in eight months in March, boosted by demand for transportation equipment, but the underlying trend remained weak against the backdrop of a strong dollar.

The report on Monday from the Commerce Department was the latest indication that while economic growth is regaining some momentum after abruptly slowing down in the first quarter, the rebound would not be as strong as experienced during the same period last year when output was chilled by cold weather.

New orders for manufactured goods increased 2.1 per cent, the largest gain since July last year, after a revised 0.1 per cent dip in February. It was the first rise since last August.

Economists had forecast orders rising 2.0 per cent in March after a previously reported 0.2 per cent gain in February. Orders excluding transportation were flat in March after edging up 0.1 per cent in February.

US financial markets were little moved by the data.

Manufacturing, which accounts for about 12 per cent of the US economy, has been hit by the strong dollar and lower crude oil prices, which are putting a squeeze on the profits of multinational corporations and oil firms.

That, together with harsh weather and a now-settled labour dispute at the West Coast ports, helped to hold the economy down to a 0.2 per cent annual growth pace in the first quarter.

Data on car sales, housing and employment suggests the economy is regaining some speed, but probably not fast enough to encourage the Federal Reserve to start raising interest rates next month, as most economists had anticipated at the beginning of the year. REUTERS