US factory orders rise, boosted by aircraft

New orders for factory goods rose in February but a gauge of planned business spending slipped, suggesting US factory activity continued to expand at a modest pace.

The Commerce Department on Tuesday said orders for manufactured goods climbed 3.0 per cent. Economists polled by Reuters had forecast orders advancing 2.9 per cent.

Factory orders were boosted by the aircraft industry, which is prone to sharp swings. Civilian aircraft orders surged 95.1 per cent. US manufacturer Boeing had previously reported orders in February for 179 aircraft, up from two a month earlier. Gains in new orders were modest when stripping out more volatile categories. Orders excluding transportation equipment increased just 0.3 per cent.

On Wall Street, stocks rebounded from the previous session, as health care shares surged on prospects of a boost to earnings. The group gained as the US government dropped plans to decrease payments for private Medicare Advantage insurers and instead to raise them by 3.3 per cent.

The benchmark S&P 500 index last week set an all-time closing high, but has thus far been unable to reach its intraday record of 1,576.09, an important psychological level for investors. The Dow Jones industrial average gained 100.61 points, or 0.69 per cent, to 14,673.46. The Standard & Poor's 500 Index rose 10.72 points, or 0.69 per cent, to 1,572.89. The Nasdaq Composite Index added 26.81 points, or 0.83 per cent, to 3,265.98.

The factory orders data suggested some of the slowdown due to the fiscal restraint was present in February as well.

Orders for non-defence capital goods excluding aircraft - seen as a measure of business confidence and spending plans - declined 3.2 per cent instead of the previously reported 2.7 per cent drop.

However, this measure of core factory orders has also been quite volatile in recent months. In January, it rose 6.7 per cent, the biggest gain since March 2010, according to revised readings.

Other data this year has shown little sign that higher taxes, and the $85 billion in across-the-board government spending cuts that took effect March 1 known as the "sequester", have weighed on economic activity.

The Commerce Department also said orders for durable goods, manufactured products expected to last three years or more, rose 5.6 per cent instead of the 5.7 per cent gain reported last week.