Durable Goods Orders Rise a Solid 2.2%

Strong demand for new aircraft lifted durable goods orders by a strong 2.2% last month, the Commerce Department said Wednesday, helping to set a solid basis for the recovery of U.S. industry.

The rise in February orders offset a revised 2.3% January fall--but analysts said that, more significantly, it preserved a huge 9.7% jump in December orders for durable goods that was seen as a key indicator of building strength for manufacturing industries.

“What we’re seeing is a deepening of the expansion in the sense that we’re finally getting enough order inflow that it lays the groundwork for a more aggressive posture by business,” said economist Robert Dederick of Northern Trust Co. in Chicago.

New orders for long-lasting goods in February were worth $135 billion, up from $132.1 billion in January and just moderately under the record $135.2 billion set in December.

In addition, the backlog of unfilled orders rose 0.3%, the third straight advance and the fourth in five months.

Unfilled orders are a measure of whether current production facilities and manpower are able to keep up with demand. If they rise, it could signal larger production lines and more jobs.

Dederick said better job opportunities will be one result of rising order backlogs.

“It’s a modestly encouraging sign for manufacturing payrolls,” said Christopher Rude, an economist with Swiss Bank Corp. in New York.

Any further job cuts by large manufacturers will be offset by gains at small and medium-size factories, some analysts said.

Wall Street economists had forecast February durables orders would fall by 0.2% instead of rise. Every aspect of last month’s report was strong, including more shipments as well as rising orders and backlogs.

The key orders increase was in demand for transportation goods, which jumped in February by 10.9% after an 8.4% January drop.

More than half the rise in transportation orders was because of increased sales of commercial airplanes. But orders for new cars and parts and for railroad equipment also gained from January.

Excluding transportation goods, orders fell last month by 0.7% following a 0.1% decline in January.

On the other hand, orders for defense goods, which experience wide monthly swings, plunged 24.5% last month after rising 10.5% in January. If defense goods are excluded, overall orders in February gained 4.1% after falling 3.1% in January.