US durable goods orders rebounded more than forecast in March, a sign manufacturing activity was beginning to stabilize after a volatile winter season.
Orders for manufactured goods meant to last three years or more rose 4 percent in March, following a 1.4 percent drop in February, the Commerce Department reported on Friday. The increase was well above estimates, which called for a 0.6 percent gain.
Excluding the volatile transportation sector, durable goods orders decreased 0.2 percent following a 1.3 percent drop in February. Durable goods orders excluding transportation have declined in each of the last six months.
Despite the solid increase, business investment declined for a seventh consecutive month in March. Orders for non-military capital goods excluding aircraft, a gauge of future business spending on new equipment, declined 0.5 percent, official data showed.
Severe winter weather and a stronger US dollar are leading US companies to remain cautious about investing. While the US dollar has weakened considerably this week, it is expected to trek upwards in the coming months as the Federal Reserve finally signals for higher interest rates.
The US dollar index, a trade-weighted average of the dollar against six major currencies, was at 97.24 in the morning session.
March was only the second increase in durable goods orders in the last five months. Many forecasters expect the US economy shifted into lower gear in the first quarter, growing well below 2 percent annually. Some forecasters say GDP may have flattened in the first quarter. Others like the Federal Reserve Bank of Atlanta say gross domestic product expanded just 0.2 percent annually. Most estimates peg Q1 GDP at 1-2 percent annually.
The Commerce Department will report its preliminary estimate of first quarter GDP growth next Thursday.
The US economy slowed significantly in the final three months of 2014 after posting its strongest six-month growth period in more than a decade. Weakness in durable goods orders reflect wavering international demand for goods as well as a growing reluctance among US companies to invest in business equipment.