New orders for long-lasting manufactured goods excluding transportation last month posted their largest gain in more than two years, suggesting the economic recovery was gathering momentum.
Overall orders, however were unexpectedly pulled down by a plunge in the volatile civilian aircraft and parts bookings, Commerce Department data showed on Friday.
New durable goods orders excluding transportation jumped 2.8 percent last month, the largest rise since December 2007, after increasing 1.7 percent in February.
Analysts polled by Reuters had expected new orders excluding transportation to rise 0.7 percent.
These are some large numbers. We're looking for something between 3.5 percent and 4 percent on first-quarter GDP due out next week. I think the market can go into the weekend comfortable that the U.S. recovery is still going full swing, said Michael Woolfolk, senior currency strategist at BNY Mellon in New York.
U.S. stock index futures added small gains after the data, while Treasury debt prices extended losses. The U.S. dollar rose against the euro and the yen.
Overall durable goods orders fell 1.3 percent last month, the biggest drop since August, following an upwardly revised 1.1 percent gain in February. Analysts polled by Reuters had forecast orders rising 0.3 percent last month from February's previously reported 0.9 percent increase.
CIVILIAN AIRCRAFT ORDERS TUMBLE
The drop in overall orders reflected a 67.1 percent tumble in non-defense aircraft and parts orders after they rose 32.7 percent the previous month. U.S. plane maker Boeing Co received 43 orders for aircraft last month, slightly below 47 in February, according to information posted on its website.
Details of the March report were upbeat. Motor vehicle and parts orders rose 2.5 percent after a 1.0 percent fall the prior month. Defense aircraft orders rose 2 percent last month following a 20.6 percent drop in February.
Durable goods orders are a leading indicator of manufacturing activity, which in turn provides a good measure for overall business health. Orders for long-lasting goods have been rising as businesses replenish inventories, keeping the country's manufacturers busy.
Manufacturing is leading the economy out of the depths of the worst downturn since the Great Depression and the recovery is starting to spill over to other segments.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, surged 4 percent in March, building on the prior month's 2.1 percent increase, the Commerce Department said.
The increase was well above market expectations for a 1.4 percent rise.
Goods ranging from machinery, computers and communications equipment also saw hefty increases in orders last month.
Durable goods inventories rose for third straight month, while shipments -- which go into the calculation of gross domestic product -- increased after two months of declines. Unfilled orders fell after two straight months of gains.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)