Electronics Demand Boosts Factory Orders

New factory orders bounced back in March, rising a bigger-than-expected 2.2%, led by the largest jump in demand for electronic equipment in more than two years, the Commerce Department said Wednesday.

Meanwhile, the Federal Reserve said its latest review of the U.S. economy showed “moderate to strong” business activity in most areas of the country during March and part of April.

“Factories were running near capacity in some areas as overall manufacturing activity was strong,” the Fed said. Retailing and commercial construction also were brisk, adding to the economy’s growth.

The Fed survey, compiled from reports from its 12 regional banks, also said, “There were more frequent reports of intensifying wage pressures as shortages of workers persisted in all districts.”

But even against this backdrop, consumer prices remained relatively well-behaved, the Fed said.

Although surging energy prices translated into fuel surcharges or higher costs for certain materials for some companies, there were few instances in which they were passed along to consumers.

The jump in factory orders during March was the best showing since a 3.8% gain in December and was stronger than the 1.6% rise many analysts were anticipating.

Orders for electronic and electrical equipment, including household appliances and communications equipment, posted the largest gain, rising 10.2%, the biggest jump since August 1997.

Orders for transportation equipment grew 4.1%.

Excluding the volatile transportation category, factory orders rose 1.9%.

Orders for industrial machinery, including computers and machine tools, however, fell 1.7% to $40.7 billion after a 3.7% decline in February.

Durable goods, big-ticket manufactured items, such as cars, expected to last at least three years, grew by 3.5% to $217.6 billion.

For nondurable goods, such as fuel, orders rose 0.6% to $165.6 billion in March, down from a 2.3% rise the month before.

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Factory Orders

New orders, in billions of dollars, seasonally adjusted:

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March: $383.2 billion

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Source: Commerce Department