Orders for Durable Goods Rise

New orders for long-lasting U.S. factory goods rose sharply in February as demand for aircraft soared, a government report showed Wednesday, with new-home sales also surprisingly strong.

Orders for big-ticket durable goods -- which include washing machines, computers, cars and other items intended to last three years or more -- advanced 2.5% after falling a revised 2.7% in January, the Commerce Department said.

The number was ahead of forecasts of a 1.7% rise, but the underlying trend was disappointing because with transportation stripped out, orders declined.

“A significant downward revision to capital goods shipments in January and further decline in February point to much lower investment spending growth in the first quarter,” Morgan Stanley economist Ted Wieseman cautioned clients. He cut his first-quarter gross domestic product forecast to 4% from 4.6%.

In a separate report, the Commerce Department said sales of new homes rose a stronger-than-expected 5.8% to a seasonally adjusted 1.16 million annual pace in February.

The sales pace was the fastest since August’s 1.19-million clip and indicated that the housing market continues to draw support from low interest rates, which the Federal Reserve has held at a post-1958 low of 1% since last year.

A 9.9% increase in transportation equipment drove the orders advance, chalking up the largest rise since July 2002. Excluding transportation, new orders fell 0.3% in February -- the first decline in three months.

Demand for military aircraft surged 61.1% after a 37.3% fall in January and civilian aircraft gained 33.8% after a 32.5% decline. Demand for motor vehicles was up 5% from a 4.4% retreat in January.

Non-defense capital goods orders excluding aircraft -- a proxy for business spending -- were up 1.1% in February after dipping 0.3% the previous month.