Durable goods orders up 0.5% in February, third monthly rise

By Martin Crutsinger, AP Economics Writer

WASHINGTON — Orders for big-ticket manufactured goods rose for a third month in February, bolstered by strong demand for commercial aircraft and machinery. The hope is that continued strength in manufacturing will help sustain the economic recovery.

The Commerce Department said Wednesday that orders for durable goods advanced 0.5% last month, slightly lower than the 0.7% gain economists had expected.

The increase was led by the second huge jump in demand for commercial aircraft, an increase of 32.7% which followed a 134.9% rise in this volatile category in January. Excluding transportation, orders posted a 0.9% increase, much better than the 0.6% decline in January.

The big jump in demand for commercial aircraft was offset by a 1.9% drop in demand for motor vehicles, which followed an even bigger 2.3% fall in the category in January. Automakers are still struggling to emerge from a steep recession, which has depressed sales and forced General Motors and Chrysler briefly into bankruptcy last year. They emerged with the help of billions of dollars in government support.

Total transportation orders fell 0.7% in February following a 19.4% rise in January.

Outside of transportation, orders for machinery rose 4.7%, biggest gain since December, while demand for primary metals such as steel rose 1.5%. Demand for computers was up 0.4%, but orders for communications equipment fell 1.7%.

The 0.5% rise in orders in February followed a 3.9% increase in January and a gain of 1.8% in December. The three straight monthly gains pushed total orders to a seasonally adjusted $178.1 billion in February.

The rebound from the deepest recession since the 1930s has been helped significantly by rising demand for factory goods. American manufacturers are benefiting not only from increased domestic demand, but rising orders from overseas. Overseas orders have been helped by last year's decline in the dollar against many currencies. A weaker dollar makes U.S. products cheaper in foreign markets.

The government will release its final look at overall economic activity in the October-December period on Friday. Economists expect that report to show the gross domestic product growing at an annual rate of 5.9%, unchanged from an estimate a month ago.

About two-thirds of that growth reflected a swing from the massive liquidation of inventories that companies had been undertaking to trim costs during the prolonged recession. Economists are looking for a restocking of inventories to help boost factory production in coming months.

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