March Factory Orders Jump Larger-Than-Expected 2.2 Percent

Orders to U.S. factories rebounded in March, but more forward-looking data on manufacturing are fairly bleak as the postwar economy shows no signs yet of a material revival.

The Commerce Department (search) reported Friday that U.S. factory orders (search) rose 2.2 percent in March, an improvement over the 1.0 percent decline registered in February.

The increase in March was larger than the 1.2 percent advance in orders economists were predicting and marked the biggest gain in eight months.

However, on Thursday a key report showed that manufacturing failed to pick up in April, with activity falling for the second straight month.

The Institute for Supply Management (search)'s manufacturing index fell to 45.4 last month, slipping from 46.2 in March. A reading below 50 means manufacturing activity is contracting; above 50 indicates industry is more busy or growing. The weakness displayed in the report was broadbased and troubled economists.

The manufacturing sector is the weakest link in the economy's ability to get back to full health. To cope with uneven customer demand, the sector has cut workers and has throttled back production, with plants operating well below capacity.

In April alone, factories slashed 95,000 jobs, the Labor Department said Friday, in its broader report on the nation's employment situation for the month. Those factory job cuts were widespread, with notable declines in motor vehicles, fabricated metals and electronics equipment.

In Friday's factory report, orders for automobiles fell by 1.9 percent in March, on top of a 1 percent decline in February. Primary metals, the category including steel, saw orders drop by 4.2 percent in March, following a 2.8 percent decrease.

Still, demand for many other types of manufactured goods went up in March.

Machinery saw orders rise by 3.7 percent in March, a turnaround from a 2.5 percent drop in February.

Orders for computers went up 1.3 percent, a big improvement over February's 18.6 percent plunge. For household appliances, orders increased 3.1 percent in March, on top of a 3.4 percent rise.

For nondurable goods, such as food and clothes, orders rose 3 percent in March, a turnaround from February's 0.9 percent decline.

Orders for furniture, however, fell by 2 percent for the second straight month.

Shipments, a barometer of current demand, went up 1.9 percent in March, after falling by 1.4 percent in February.