New orders for long-lasting U.S. manufactured goods rose solidly in March and bookings for the prior month were much stronger than initially thought, pointing to strength in the manufacturing sector.
The Commerce Department said on Wednesday durable goods orders increased 2.5 percent after an upwardly revised 0.7 percent rise in February, which was previously reported as a 0.6 percent fall.
Economists had expected a 2.0 percent increase in March. Orders last month were buoyed by bookings for motor vehicles, transportation equipment and aircraft.
Excluding transportation, durable goods orders rose 1.3 percent after a revised 0.6 percent gain in February, which was previously reported as a 0.3 percent drop. Economists had expected this category to rise 1.8 percent.
It's a pretty solid report. The manufacturing sector remains one of the stronger sectors in the economy while other sectors lag, said Julia Coronado, chief economist for North America at BNP Paribas in New York.
Durable goods orders are a leading indicator of manufacturing and the report indicated vibrancy in the sector, even though the economy lost some momentum in the first quarter.
Government data on Thursday is expected to show economic growth slowed to an annualized rate of 2.0 percent or even less in the first three months of this year, held back by weak consumer spending and a bigger trade deficit. The economy grew at a solid 3.1 percent rate in the fourth quarter.
The durable goods report came as officials at the Federal Reserve prepared to wrap up a two-day meeting on monetary policy on Wednesday. The U.S. central bank is most likely to regard the loss of growth momentum in the first quarter as temporary.
It is expected to continue with its $600 billion government bond-buying program, which ends in June, and renew its commitment to ultra low interest rate for an extended period.
U.S. financial markets were little moved by the durable goods report.
Outside of transportation, March orders for primary metals rose 3.9 percent, while machinery orders jumped 4.2 percent.
However, orders for computers and electronic products, and communications equipment fell.
The Commerce Department report showed non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rose 3.7 percent last month after an upwardly revised 0.5 percent gain in February.
Economists had expected a 2.8 percent increase from a previously reported 0.7 percent fall.
Shipments of non-defense capital goods, excluding aircraft, rose 2.2 percent after advancing 0.4 percent in February. This component goes into the calculation of the government's gross domestic product.
(Additional reporting by Richard Leong in New York, Editing by Andrea Ricci)