Factory orders hum along


WASHINGTON -- New orders at U.S. manufacturers rose in March, and claims for unemployment benefits fell to the lowest level in five weeks, suggesting that a factory rebound and a stabilizing job market will underpin the recovery.

The 0.4 percent increase in factory orders, to $318.5 billion for the month, followed a 0.2 percent rise in February, the Commerce Department said. Excluding transportation industries, orders rose for the first time since December.

The number of Americans filing for unemployment benefits fell by 10,000 last week, to 418,000, the fewest since March 23. That led investors to expect last month's employment report, due out today to show a gain in jobs for the second month in a row.

Demand is starting to improve at producers such as Dow Chemical Co., which makes plastics and chemicals used in industries ranging from homebuilding to health care. That might not be enough to sustain a recovery, economists say. A pickup in business spending on equipment is necessary, and companies such as Dell Computer Corp. have said they see little evidence that is happening.

"It looks like the manufacturing recession has ended and we're into the very beginning of an upturn," said Stuart Hoffman, chief economist at PNC Bank in Pittsburgh, the largest bank in Pennsylvania.

The increase in March factory orders was led by larger demand for higher-priced fuels and military goods. Orders for capital goods fell.

Weekly unemployment claims have exceeded 400,000 since mid-March, when previously laid-off workers started filing new applications under a new federal law extending benefits. The level also suggests that companies are waiting for stronger signs of economic recovery before adding to payrolls.

U.S. employers planned 32 percent fewer job cuts last month than in April of last year, according to the Chicago job-placement company Challenger, Gray & Christmas Inc. Businesses announced last month plans to eliminate 112,649 jobs, down from 165,564 in April 2001, at the start of recession.

"The fever has broken," John Challenger, chief executive of Challenger, Gray & Christmas, said in an interview.

Job growth probably won't pick up soon, and the unemployment rate is likely to rise, he said, adding, "Right now, we're in that period where a number of companies are still in recession."

Analysts had expected factory orders to be unchanged at $323.8 billion, based on the median of 52 forecasts in a Bloomberg News survey.

A report yesterday said manufacturing expanded at a slower pace last month as new orders slowed and employment dropped. The Institute for Supply Management's factory index fell to 53.9 from 55.6 in March.

The increase in March factory orders was led by a 9.6 percent increase in refined petroleum products, the Commerce Department said. Crude oil futures rose 21 percent during the month.

Orders for all nondurable goods rose 1.6 percent in March, the biggest increase in two years. Besides petroleum, bookings also rose for dairy products, tobacco, paper and chemicals.

Orders for durable goods fell 0.5 percent in March after rising 2.6 percent. The figures omit semiconductors because manufacturers declined to submit data. They accounted for 2.1 percent of factory orders last year.

Orders for nondefense capital goods excluding aircraft, a barometer of businesses' plans to invest in new equipment, fell 3.6 percent in March after rising 0.9 percent in February.

The economy grew at a 5.8 percent annual pace from January to March, the fastest in more than two years, helped by consumer spending, government data indicated last week. Growth might slow to a 3.4 percent annual rate this quarter and stay near that pace for the rest of the year, according to economists in the latest Blue Chip Economic Indicators survey.

Spending on business equipment and software has fallen for six straight quarters, government figures show. Corporate profits have fallen for five quarters, based on 390 of the S&P; 500 index companies that had reported results as of Monday. That might limit investment.

Orders for transportation equipment fell 1.3 percent in March after rising 11.3 percent the previous month. Orders for ships and boats fell 53 percent in March after rising 166 percent in February. Autos were unchanged. Orders for commercial aircraft rose 0.6 percent in March after a 60.5 percent increase in February.

Defense contractors continued to benefit as the nation stepped up spending to combat terrorism. Defense orders rose 19.3 percent after rising 94.7 percent a month earlier. Military aircraft orders rose 24 percent after gains of 60 percent and 61 percent in the previous two months.

Copyright © 2019, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad