Durable-goods orders jumped in February

updated 3:56 p.m. ET March 24, 2006

WASHINGTON - Orders to U.S. factories for big-ticket manufactured goods rose in February by the largest amount in three months, propelled by soaring demand for civilian aircraft.

The Commerce Department reported that durable goods orders increased by 2.6 percent last month, double the gain that economists had been expecting. The strength was concentrated in a huge 52.5 percent increase in orders for commercial aircraft, which reflected a rebound after a 70.1 percent drop in January aircraft orders.

Economists believe that manufacturing, the hardest-hit sector in the 2001 recession, will post solid growth this year in spite of the blows delivered by rising energy prices.

Excluding transportation, orders fell by 1.3 percent last month, the weakest showing in this category since last July. But analysts noted that this drop followed strong gains in the non-transportation area in the previous two months, a good signal for future growth.

“The bottom line here is that industry is doing well,” said Ian Shepherdson, chief U.S. economist for High Frequency Economics.

In transportation, all the strength came from commercial aircraft orders. While total transportation orders rose by 13.4 percent, that reflected the 52.5 percent rise in civilian aircraft. Demand for military aircraft fell by 16.7 percent.

Orders for motor vehicles dropped by 3.3 percent in February after a 3.2 percent decline in January. American automakers have been struggling with increased foreign competition and sagging demand for sport utility vehicles in the face of rising gasoline prices.

General Motors Corp. earlier this week announced one of the largest buyouts in corporate history in an effort to cut costs by trimming payrolls.

The 2.6 percent increase in overall orders was the biggest gain since a 5.3 percent rise last November. It left total orders at $215.8 billion last month, an increase of $4.99 billion.

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