Orders to factories for costly manufactured goods, such as cars and machinery, rose by a strong 3.4 percent in March, fresh evidence that America’s economic recovery is bounding ahead.
The sizable over-the-month increase in durable-goods orders came after an even better 3.8 percent advance in February, the Commerce Department reported Friday. Durable goods are big-ticket items expected to last at least three years.
The strength in March was broad-based and far exceeded the 0.7 percent increase that economists were forecasting.
“New orders blew away expectations,” said Sherry Cooper, chief economist at BMO Nesbitt Burns.
On Wall Street, however, stocks were mixed. The Dow Jones industrials were off 31 points, while the Nasdaq was up 15 points in early morning trading.
The encouraging news on manufacturing activity in March joins other good economic reports for the month: Retail sales were brisk and the economy, after months of sluggish payrolls growth, added a whopping 308,000 jobs, the most in four years.
Federal Reserve Chairman Alan Greenspan, in an appearance on Capitol Hill earlier this week, delivered upbeat assessments of the nation’s economic health and said that March turned out to be a good month for the economy.
Looking ahead, he also was optimistic about the economy’s ability to maintain solid momentum.
Against this backdrop, Greenspan said that at some point super-low interest rates will have to rise to prevent inflation — which is not currently a problem — from possibly becoming one.
Some economists believe the Fed will begin to boost rates later this year, while others don’t foresee higher rates until 2005.
In any event, most agree that the Fed will hold short-term rates at 1 percent, the lowest since 1958, when its meets next on May 4.
In the manufacturing report, orders for cars rose by 3.6 percent in March, after a 6 percent gain in February. For machinery, orders went up 3.1 percent last month, following a 3.8 percent advance.
Other categories posting gains last month included primary metals, including steel, fabricated metal products, and electrical equipment and appliances.
“The pickup in demand can be attributed to a weaker dollar that has helped American manufacturers compete internationally and the strong rebound in capital equipment investment,” said Daniel Meckstroth, chief economist for Manufacturers Alliance/MAPI.
There were a few weak spots: orders for communications equipment fell and orders for computers were flat in March.
Some economists believe the economy grew at a robust annual rate in the range of around 4.5 percent to 5 percent in the January-to-March quarter of this year. That would be up from a healthy 4.1 percent rate posted in the final quarter of 2003. The government releases its estimate of first quarter economic growth, as measured by the gross domestic product, on Thursday.