New orders for US-manufactured goods rebounded more than expected in February, boosted by demand for machinery and commercial aircraft as manufacturing regains its footing.

Factory orders increased 1.4 per cent after dropping 3.8 per cent in January, the Commerce Department’s Census Bureau said on Tuesday (Apr 2). Economists polled by Reuters had forecast orders rebounding 1.0 per cent. They rose 1.0 per cent year-on-year in February.

Manufacturing, which accounts for 10.4 per cent of the US economy, has turned the corner after struggling in the aftermath of 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022. A survey from the Institute for Supply Management on Monday showed its manufacturing PMI rising above the 50 mark in March for the first time since September 2022.

Commercial aircraft orders increased 24.6 per cent in February after slumping 63.5 per cent in the prior month. Orders for motor vehicle bodies, parts and trailers rose 0.3 per cent. Overall transportation orders rebounded 3.3 per cent after tumbling 18.3 per cent in January.

Machinery orders increased 1.8 per cent, lifted by a 12.5 per cent surge in mining, oil field and gas field machinery. There were also increases in orders for fabricated metal products and primary metals. But orders for computers and electronic products declined 1.4 per cent, while those for electrical equipment, appliances and components decreased 2.1 per cent.

Shipments of manufactured goods increased 1.4 per cent, while inventories rose 0.3 per cent. Unfilled orders at factories were unchanged for a second straight month.

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The government also reported that orders for non-defence capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, rose by an unrevised 0.7 per cent in February. Shipments of these so-called core capital goods declined 0.6 per cent instead of 0.4 per cent as reported last week.

Non-defence capital goods orders rebounded 4.3 per cent instead of 4.4 per cent as initially estimated. Shipments of these goods increased 2.6 per cent instead of 2.7 per cent as reported last week.

These shipments go into the calculation of the business spending on equipment component in the gross domestic product report. Business spending on equipment has contracted in four of the last five quarters. REUTERS