WASHINGTON - Orders for large manufactured products, excluding transportation goods, rose last month by the most since the recession began in December 2007.
Overall orders fell by 1.3 percent, the Commerce Department said Friday, dragged down by a sharp drop in demand for commercial aircraft. But excluding planes and other transportation goods, orders surged 2.8 percent, much more than analysts forecast.
The report is the latest sign that the once-battered manufacturing sector is helping drive the economic recovery. U.S. factories are benefiting from overseas sales and a sharp increase in business spending.
Analysts said the report shows businesses are spending more on new equipment in anticipation of a stronger economy.
"Firms are finally putting their money where their mouths are and betting on a rebound," Diane Swonk, chief economist at Mesirow Financial, said in a note to clients.
The report, plus one that said new home sales skyrocketed 27 percent last month, helped boost the stock market. The Dow Jones industrial average rose 42 points in early trading, while other indexes also gained.
The weakest sector in the durable goods report was aircraft orders, which plummeted by 67 percent in March. But that followed sharp gains of 135 percent in January and 33 percent in February.
Outside the aircraft industry, the gains were broad-based.
Orders for computers and electronic products rose 3.4 percent, the most since February 2009, while demand for machinery jumped 8.6 percent, the most since September 2009.
Auto and auto parts orders rose 2.5 percent, compared with a 1 percent drop the previous month. The U.S. auto industry reported healthy sales gains in March due to temporary federal tax incentives.
Overall, business spending on capital goods such as computers and machinery jumped by 4 percent, more than many economists forecast and the second straight increase. Business investment has been a critical factor in the recovery. - AP