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Factory orders roll ahead
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May 3, 2000: 10:22 a.m. ET
March orders rise 2.2%, above forecasts; ex-transport up 1.9%
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NEW YORK (CNNfn) - Orders placed with U.S. manufacturers regained momentum in March after stalling the month before, the government reported Wednesday -- an indication that demand for American-made goods, both at home and abroad, still remains strong.
 Orders at U.S. factories jumped 2.2 percent, the Commerce Department said, above the 1.5 percent gain economists polled by Briefing.com had expected and the revised flat reading registered the month before. February's orders were originally reported as a 0.8 percent drop. Excluding transportation, orders rose 1.9 percent after gaining 1.5 percent in February.
Strengthening demand at home and abroad for American-made goods helped fuel March's rise, providing more evidence that the U.S. economy is running at an exceptionally strong pace, analysts said. The Federal Reserve, the nation's central bank, is expected to lift its benchmark rate by at least a quarter point -- and possibly even a half point -- at its May 16 policy meeting to curb economic growth and keep inflation under wraps.
"The non-manufacturing sectors of the economy remain quite robust, and with returning strength in factory orders, the manufacturing sector looks healthy as well," said Steven Wood, an economist with Banc of America Securities in San Francisco. "Woe be the FOMC (Federal Open Market Committee.)"
Orders for the first three months of 2000 were up 2.5 percent from the fourth quarter of 1999 and 8.7 percent from a year earlier, Commerce said.
Insatiable consumer demand
Behind the robust numbers lies strong consumer spending, driven in large part by job security, wage and salary gains and rising stock market and real estate values -- all things that have made Americans more confident about spending money on goods and services, even as interest rates have gone up.
 Wednesday's numbers, combined with other reports showing resilient growth, suggest that the economy is not yet responding to the Fed's five quarter-point rate increases implemented during the past 11 months, despite the central bank's best efforts to slow growth and keep inflation in check, Kathleen Camilli, an economist with Tucker Anthony, told CNNfn. (550KB WAV) (550KB AIFF)
Orders for electronic goods, transportation and automotive products led the overall monthly gain, according to the Commerce Department. Electronics orders jumped 10.2 percent in March, while orders for transportation products such as engine mechanisms and other machinery gained 4.1 percent on the month.
Part of the increase in transportation orders came from an increase in orders for civilian aircraft, which gained 4.1 percent in March after plunging 25.8 percent a month earlier. The end of a 40-day strike by engineers at Boeing Co. (BA: Research, Estimates) in mid-March prompted a flood of new orders at the world's biggest aircraft manufacturer.
Can't keep it on the shelves
Auto production increased 4.9 percent in March, corresponding to strong demand for new cars and trucks. General Motors Corp. (GM: Research, Estimates), Ford Motor Co. (F: Research, Estimates), DaimlerChrysler (DCX: Research, Estimates) and other automakers Tuesday posted higher sales in April, extending their string of strong monthly performances set in the first quarter of the year.
Orders for durable goods rose 3.5 percent in March, while orders for non-durable goods rose 0.6 percent, led by paper, petroleum and coal products. Inventories, meanwhile, were unchanged in March after a 0.7 percent increase in February as producers found it difficult to keep their shelves stocked in the face of strong demand for their goods, analysts said.
Shipments of goods jumped 1.7 percent, while the inventory-to-shipments ratio -- a measure of demand -- slipped to an all-time low of 1.26 months compared to 1.28 months in February. Unfilled orders gained 1.1 percent. Excluding military hardware, overall factory orders rose 2.4 percent in March after registering no change in February. 
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