New orders for costly U.S. manufactured goods likely fell in March after climbing in February for the first time in seven months, underlining continuing weakness in the industrial sector, according to a Reuters poll.
The median forecast of 72 economists showed orders for long-lasting goods like new cars and refrigerators declined 1.5 percent in March after rising 3.5 percent in February. Forecasts ranged from down 4.9 percent to up 1.5 percent.
Orders posted an unexpectedly sharp gain in February, aided by a rebound in capital goods orders and orders for computers and electronic products.
The factory sector has been particularly hard hit by the recession, which began in December 2007. In March, the manufacturing sector lost 161,000 jobs, continuing a long string of job losses. The Federal Reserve's industrial production figure has dropped for five straight months.
Analysts view orders for long-lasting goods, which include items like cars and major appliances that are meant to last for several years, as a harbinger of activity in the manufacturing sector.
There were tentative signs in recent reports that the hard-hit manufacturing sector might be nearing bottom and that the recession hit its worst level in the first quarter, said Dan Meckstroth, an economist for Manufacturers Alliance/MAPI.
We expect the pace of the industrial decline to be much slower going forward and anticipate a return to modest growth early this fall, Meckstroth said.
Stripping out transportation orders, which are heavily skewed by aircraft, new orders are expected to fall 1.2 pct in March after a 3.7 percent rise the month before.
In a further sign of weakening demand, nondefense capital goods excluding aircraft -- a key component of the monthly report that is seen as a good gauge of business spending -- likely fell 1.8 percent in March after jumping 7.1 percent in February, according to the poll.
The Commerce Department will release the durable goods report at 8:30 a.m. on Friday.
The following is a selection of comments from economists:
Forecast: -2.0 percent
We think orders will remain weak on balance, in line with the aggressive pullback in overall business investment. Another source of weakness in the report will likely be nondefense aircraft orders; while Boeing commercial aircraft orders were up slightly, they were mostly for low-value planes.
Forecast: -1.5 percent
Companies are still liquidating inventories after a sharp drop in sales in the past two quarters. March orders are likely to be weaker after the partial rebound in February. The auto industry has been at the forefront of the recession, perpetuating weakness in headline orders. Civilian aircraft orders, a very volatile series, will likely temper the sector's weakness, albeit minimally.
Forecast: -3.5 percent
We expect advance durable goods orders to retreat significantly in March to better reflect weak economic conditions of the first quarter. Outsized gains in machinery and technology equipment should reverse. In addition, low order bookings for domestic civilian aircraft last month suggest aircraft activity will remain depressed. The one positive may be an increase in motor vehicle orders as auto plants have now come back online.
(Polling by Bangalore Polling Unit)
(Reporting by Nancy Waitz; Editing by Leslie Adler)