Factories orders up 1.4 percent in March

May 2, 2008 7:25:20 AM PDT
U.S. factories saw demand for their products rebound in March, following a two-month slump. The Commerce Department reported Friday that orders placed with U.S. manufacturers rose 1.4 percent in March. That was an improvement from the 0.9 percent dip reported in February and the 2.3 percent drop in January.

The latest snapshot of manufacturing activity was better than many economists were forecasting. They were predicting a smaller, 0.2 percent rise in orders.

Most of the pickup in March came from "nondurable" goods - a broad category including food, paper products, and petroleum and coal products. Orders for nondurables rose 2.6 percent in March, following a 1.1 percent drop in February. Higher prices factored into the rise.

Meanwhile, demand for "durable" goods, big-ticket items, including airplanes, machinery and cars, edged up 0.1 percent in March, compared with a 0.6 percent decline in the previous month.

A more forward-looking report, released Thursday, said that manufacturing activity contracted in April. The Institute for Supply Management said its manufacturing barometer held steady at 48.6 last month, unchanged from March. A reading below 50 indicates contraction, while a reading above 50 signals growth.

Factories - especially those making things related to housing - have been hit hard by the collapse of the once high-flying housing market. Demand at home for building materials and furnishings has taken a hit.

On the other hand, U.S. exports of goods and services has been thriving, one of the main reasons why the economy managed to keep afloat in the first three months of this year. The falling value of the dollar has made U.S. merchandise less expensive and thus more attractive to foreign buyers.

Still, U.S. factories are managing to meet customers' demands with fewer workers.

A Labor Department report released Friday showed that manufacturers continued to shed jobs, cutting 46,000 in April alone.

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