WASHINGTON (AP) — Orders for long-lasting manufactured goods rose 2.6 percent in March, but a key category that tracks business investment spending fell for the third month out of the past four.
The big rise in orders for durable goods, which followed an even bigger 3.5 percent advance in February, was driven by a surge in demand for commercial aircraft, the Commerce Department reported Thursday. Airplane orders shot up 44.5 percent last month. Excluding the volatile transportation category, orders would have been flat last month after a modest 0.9 percent rise in February.
American industry has benefited from stronger global growth and a drop in the dollar that makes U.S. products less expensive overseas. But a rebound in demand in the key investment category seems to have stalled so far this year.
The category that follows business investment plans edged down 0.1 percent in March after a 0.9 percent increase in February. It was also down in January and December, raising concerns about this important driver of economic growth.
Analysts said the drop in investment orders was a bit surprising, given that Congress in December passed a $1.5 trillion tax cut that was aimed in part at giving businesses incentives to boost spending to expand and modernize their operations. But some said they still expected gains in this area in coming months.
"We still expect investment growth to pick up over the rest of the year as tax cuts boost domestic demand and capacity constraints bite," said Michael Pearce, senior U.S. economist at Capital Economics.
For March, orders for machinery fell by 1.7 percent, while demand for computers dropped 2.6 percent. Orders for primary metals such as steel did rise 1.4 percent and demand for communications equipment shot up 8.2 percent.
The 44.5 percent surge in orders for commercial aircraft followed a 39.1 percent rise in February after a 27.9 percent drop in January. Orders for motor vehicles and parts edged up a slight 0.1 percent last month after a strong 2 percent gain in February.
In a separate report, the Labor Department said that the number of Americans filing claims for unemployment benefits declined by 24,000 last week to 209,000. That was the lowest weekly total in more than 48 years, since claims dipped to 202,000 for the week ending Dec. 6, 1969. Applications for unemployment benefits, a proxy for layoffs, have been below 300,000 for more than three years, providing evidence of the strength in the labor market.