Orders for durable goods manufactured by U.S. companies rose for a second straight month in February though a category that reflects business investment plans slipped slightly.
The Commerce Department said orders rose 1.7%, topping economists’ expectations of a 1.2% increase and following January’s revised 2.3% gain. It was another strong month for the transportation sector, with commercial aircraft orders increasing 47.6%.
Durable goods orders so far this year are running 1.6% higher than in the first two months of 2016.
“The growth indicates that manufacturers are steadily recovering from a rough patch that began in 2015 when lower energy prices and slower economic growth worldwide cut into demand for U.S. factory goods,” The Associated Press said.
Reuters noted that manufacturing, which accounts for about 12% of the U.S. economy, “is also being underpinned by a burst of confidence amid promises by the Trump administration to slash taxes for businesses, boost infrastructure spending and repeal some regulations.”
The closely-watched category of non-defense capital goods orders fell 0.1% last month after rising 0.1% in January but according to Reuters, “a surge in shipments amid demand for machinery and electrical equipment supported expectations for an acceleration in business investment in the first quarter” after a 1.9% annualized growth pace in the fourth quarter.
Shipments of so-called core capital goods rose 1.% in February after declining 0.3% the previous month. The Federal Reserve last week said business investment appeared to have “firmed somewhat.”
“The evidence is building that manufacturing activity is on something of an upswing and that capital spending on business equipment is poised to advance for a second consecutive quarter,” John Ryding, chief economist at RDQ Economics, told Reuters.
Orders for electrical equipment, appliances and components jumped 2.2%, the biggest increase in seven months, and shipments advanced 1.5%. Orders also rose 2.3% for primary metals, but demand for motor vehicles and parts dropped 0.8%.