US factory orders rose modestly in March

WASHINGTON – Orders to U.S. factories advanced by a modest amount in March, reflecting stronger demand in the volatile category of defence equipment.

Factory orders rose 1.1 per cent, rebounding from a 1.9 per cent drop in February, the Commerce Department reported Wednesday. It was only the second increase in total orders in the past five months as American manufacturers have struggled with a weak global economy, a strong dollar and a big fall in oil prices.

A key category that serves as a proxy for business investment posted a tiny 0.1 per cent rise in March after a 2.7 per cent decline in February.

Orders for durable goods such as autos and appliances rose 0.8 per cent. Demand for nondurable goods such as paper and chemicals rose 1.5 per cent.

Without the gains in defence, which can swing widely from month to month, orders would have been up a smaller 0.2 per cent in March. Excluding transportation, orders would have risen 0.8 per cent.

In the transportation category, demand for commercial aircraft fell 5.7 per cent. Demand for military aircraft and parts jumped 65.3 per cent, while demand for military ships and boats surged 65.4 per cent.

Manufacturing has been under pressure for the past year because of global headwinds that have depressed exports and a big plunge in energy prices, which has resulted in sharp cutbacks in investment spending by U.S. oil companies.

Prospects for 2016 remain uncertain. Some economists believe that U.S. factories should see a pickup in demand since the dollar has stopped strengthening against other currencies.

The global economy also seems to have stabilized after a shaky start to the year. But other analysts are uncertain about how long it might take for manufacturing to bounce back.