New orders for U.S. factory goods rose more than expected in March, driven by surging demand for electronics products amid the artificial intelligence investment boom.
Factory orders climbed 1.5 percent last month, the biggest gain since November, the Census Bureau reported Monday. Economists surveyed by Reuters had predicted a 0.5 percent increase. On a year-over-year basis, orders were up 3.7 percent.
The strength came after an upwardly revised 0.3 percent gain in February, signaling renewed momentum in a sector that accounts for roughly 10 percent of the U.S. economy.
The rebound suggests that despite recent economic headwinds, businesses remain committed to capital investment in key areas. That’s created rising demand for high tech goods manufactured in the U.S.
The standout was computers and electronics products, which posted its largest single-month gain in 25 years. Orders in this category jumped 3.6 percent to $29.6 billion, the highest level since March 2001.
Within electronics, orders for electromedical, measuring, and control instruments surged 7.9 percent to $10.6 billion, hitting a record high.
Durable goods orders—items intended to last more than three years—rose 0.8 percent, while nondurable goods orders climbed 2.1 percent to their highest level since October 2022.
The recovery in factory orders comes as manufacturers grapple with rising input costs. The U.S.-Israeli war with Iran has driven oil prices up nearly 50 percent, pushing up energy costs and raw material expenses. Supplier delivery times have also grown longer, adding pressure on production schedules.
Partially offsetting that drag, defense-related orders rocketed in March. Within the electronics category, defense search and navigation equipment rose 4 percent. Defense aircraft orders jumped 17.8 percent to $6.1 billion, reflecting continued military contracting and weapons modernization programs.
The March report shows that manufacturers are pushing forward with investment plans despite these headwinds. The surge in electronics orders, in particular, reflects the pull from artificial intelligence-driven demand that has dominated capital spending across tech and adjacent sectors.
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