April 4, 2018 / 2:07 PM / 2 years ago

U.S. factory orders increase broadly in February

WASHINGTON (Reuters) - New orders for U.S.-made goods rebounded in February, boosted by strong demand for transportation equipment and a range of other products, pointing to a strengthening manufacturing sector.

FILE PHOTO: People walk past a rack of SUV doors on a cart, at the General Motors Assembly Plant in Arlington, Texas June 9, 2015. REUTERS/Mike Stone

Factory goods orders increased 1.2 percent, nearly unwinding January’s revised 1.3 percent decline, the Commerce Department said on Tuesday.

Economists polled by Reuters had forecast factory orders rising 1.7 percent in February after a previously reported 1.4 percent drop in January. Orders surged 7.9 percent on a year-on-year basis in February.

Orders for transportation equipment soared 7.0 percent, lifted by a 26.2 percent jump in the volatile orders for civilian aircraft. There were also increases in orders for machinery, which rose 1.2 percent after slipping 0.2 percent in January.

Orders for mining, oil field and gas field machinery climbed 1.8 percent. Orders for motor vehicles shot up 1.5 percent. Orders for electrical equipment, appliances and components surged 3.4 percent while bookings for computers vaulted 3.5 percent.

Manufacturing, which accounts for about 12 percent of U.S. economic activity is being supported by strong domestic and global demand, but a shortage of skilled workers and capacity constraints could hurt factory output.

A survey on Monday showed a slight ebb in sentiment among manufacturers amid rising concerns over labor shortages and the supply chain. Manufacturers also reported that tariffs on steel and aluminum imports imposed by President Donald Trump in early March were raising prices, “causing panic buying” and “leading to inventory shortages for non-contract customers.”

Trump imposed 25 percent tariffs on steel imports and 10 percent for aluminum to shield domestic industries from what he has described as unfair competition from other countries.

The Commerce Department revised February orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans, to show them rising 1.4 percent instead of the 1.8 percent jump reported last month.

Orders for these so-called core capital goods fell 0.3 percent in January. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, increased 1.4 percent in February as reported last month.

Core capital goods shipments were unchanged in January.

Reporting by Lucia Mutikani; Editing by Andrea Ricci

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