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Factory orders rise most in year

March gains show rise in corporate spending

Philip Diana works on a racing shell at Composite Engineering in Concord. Orders placed with American factories rose 3.1 percent in March. (Michael Fein/Bloomberg News)

WASHINGTON -- Orders placed with American factories rose the most in a year in March, reinforcing signs that corporate spending is recovering from a slump.

Bookings increased 3.1 percent, exceeding economists' predictions, after gaining 1.4 percent in the prior month, the Commerce Department said yesterday. Excluding transportation equipment, demand rose 1.9 percent after no change in February.

The Federal Reserve, forecasting improved second-half growth, is counting on a bigger contribution from business spending while housing remains in recession. Yesterday's numbers come a day after the Institute for Supply Management said manufacturing expanded more than forecast last month.

"While we're not seeing unbridled optimism from businesses, things are looking better," said Richard DeKaser, chief economist at National City Corp. in Cleveland. "The Fed wants moderate sustained growth, and this is consistent with that."

Economists expected factory orders to rise 2.2 percent in March after a previously reported 1 percent gain in February, based on the median estimate in a Bloomberg News survey.

Earlier in the day, a report showed US companies added the fewest jobs in almost four years in April. The 64,000 increase in payrolls was the least since July 2003 and followed a revised gain of 98,000 in March, ADP Employer Services said.

A separate report yesterday showed job cuts disclosed by US employers increased last month from a year earlier, led by financial institutions including Citigroup Inc. and mortgage lenders. Job cuts rose 18 percent to 70,672, the most in two months, said Chicago-based Challenger, Gray & Christmas Inc.

Economists forecast a government report tomorrow will show 100,000 jobs were added in April, the lowest monthly total in more than two years.

Unfilled orders rose 1.8 percent after a 1.1 percent gain.

Orders for durable goods, which make up about 55 percent of factory demand, rose a revised 3.7 percent after a 2.3 percent increase in February. The government last month reported a 3.4 percent rise in durables orders for March.

Demand for capital goods excluding aircraft and military equipment, a measure of future business investment, increased 4.8 percent after a decline of 2.4 percent. The Commerce Department had previously estimated a 4.7 percent gain. Shipments of these goods, which are used by the government in its calculation of gross domestic product, rose 0.6 percent after declining 0.1 percent.