May 2, 2019 / 2:18 PM / in 18 days

U.S. factory orders post largest increase in seven months

WASHINGTON (Reuters) - New orders for U.S.-made goods rose by the most in seven months in March amid strong demand for transportation equipment, but rising inventories and a marginal rebound in unfilled orders pointed to slower manufacturing activity.

FILE PHOTO: Line workers spot weld parts of the frame on the flex line at Nissan Motor Co's automobile manufacturing plant in Smyrna, Tennessee, U.S., August 23, 2018. REUTERS/William DeShazer/File Photo

Factory goods orders rebounded 1.9 percent, also boosted by orders for computers and electronic products, the Commerce Department said on Thursday. That was the largest rise since August 2018. Data for February was revised up to show factory orders slipping 0.3 percent instead of falling 0.5 percent as previously reported.

Economists polled by Reuters had forecast factory orders would rise 1.5 percent in March. Factory orders increased 1.7 percent compared to March 2018.

Inventories at factories increased 0.4 percent in March. The stock of unsold goods has increased in 28 of the last 29 months. Unfilled others at factories rose 0.2 percent in March after falling 0.2 percent in February.

Manufacturing, which accounts for about 12 percent of the economy, is being pressured by sluggish global demand, continued uncertainty over trade talks between the United States and China, and a large inventory build. Fading depreciation provisions for capital equipment as a result of the Trump administration’s tax restructuring has also slowed business investment, further squeezing manufacturing.

A survey on Wednesday showed a measure of national factory activity fell to a 2-1/2-year low in April.

In March, orders for machinery edged up 0.1 percent after falling 0.9 percent in the prior month. Orders for electrical equipment, appliances and components rose 0.5 percent while those for computers and electronic products jumped 2.2 percent.

Transportation equipment orders surged 7.0 percent in March after falling 2.9 percent in the prior month. Orders for civilian aircraft and parts soared 31.0 percent. Motor vehicles and parts orders increased 1.5 percent.

The Commerce Department also said March orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, increased 1.4 percent instead of the 1.3 percent jump reported last week.

Orders for these so-called core capital goods were unchanged in February. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, were unchanged in March rather than slipping 0.2 percent as previously reported.

Core capital goods shipments rose 0.3 percent in February. Business spending on equipment spending stalled in the first quarter.

Reporting by Lucia Mutikani Editing by Paul Simao; 1 202 898 8315; Reuters Messaging:

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