U.S. factory orders rise, offer glimmer of hope for manufacturing

Reuters
Chrysler Group LLC assembly workers lower an engine on to the frame of a 2014 Ram 1500 pickup truck on the assembly line at the Warren Truck Plant during a tour of the plant's redesigned work stations in Warren, Michigan, September 25, 2014. REUTERS/Rebecca Cook

WASHINGTON,(Reuters) - New orders for U.S. factory goods unexpectedly rose in February after six straight months of declines, offering a ray of hope for a sector that has been battered by a strong dollar and weaker global demand.

The Commerce Department said on Thursday new orders for manufactured goods increased 0.2 percent, the largest gain since July, after a revised 0.7 percent drop in January.

Orders excluding transportation rose 0.8 percent, the biggest rise in eight months. Shipments of factory goods rose 0.7 percent after four straight months of declines.

Economists polled by Reuters had expected factory orders to slip 0.5 percent in February after a previously reported 0.2 percent dip in January.

The department also said orders for non-defense capital goods excluding aircraft - seen as a measure of business confidence and spending plans – declined 1.1 percent instead of the 1.4 percent drop reported last month.

Manufacturing has been hit by a strong dollar and lower crude oil prices, which are putting a squeeze on the profits of multinational corporations and oil firms.

Some energy firms are either delaying or cutting back on capital expenditure projects.

Softer growth in China and Europe has also weighed on factories, with a report on Wednesday showing manufacturing activity at a near two-year low in March.

A labor dispute at the West Coast ports, which has since been resolved, is still causing disruptions to the supply chain.

Despite February's surprise gain in factory orders, it may be sometime before the sector, which accounts for 12 percent of the economy, rebounds. Unfilled orders at factories fell 0.5 percent in February, declining for a third straight month.

Shipments of non-defense capital goods orders excluding aircraft, used to calculate business equipment spending in the gross domestic product report, were revised up to show a 0.3 percent gain in February instead of the previously reported 0.2 percent rise.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)