U.S. factory orders higher in March and business investment in capital goods jumped, indicating economic strengthening even before the bulk of the most recent stimulus spending hit the economy.
U.S. factory orders rose 1.1 percent in March, the Commerce Department said Tuesday. That was below the 1.3 percent increase expected by analysts but above the 0.8 percent contraction amid February’s harsh weather.
Orders for durable goods, those expected to last at least three years, rose a revised 0.8 percent. Initially, this was recorded as a 0.5 percent rise.
Orders for nondurable goods rose an impressive 1.5 percent in the month.
The Biden Administration’s $1.9 trillion American Rescue Plan was signed into law in mid-March but only the direct stimulus payments went out immediately. And it appears most of those funds were saved rather than spent. Most of the rest of the spending authorized in the legislation will be spent over the coming months and years.
The deluge of orders for goods suggests that demand is not the challenge facing U.S. businesses, calling into question the need for demand-side stimulus measures such as temporary tax cuts, direct payments, enhanced unemployment, and deficit spending measures. The American Families Plan and American Jobs Plan, the Biden administration’s other big legislative proposals now before Congress, may no longer be seen as compelling by even some Democratic lawmakers now that the recovery is powering ahead on its own steam.
Orders for nondefense capital goods excluding aircraft are considered a proxy for business investment. These rose a revised 1.2 percent in March, better than the prior estimate of a 0.9 percent increase. That suggests improved business confidence.
Orders for industrial machinery for 16.4 percent. Orders for cars, trucks, and parts rose 1.8 percent.