Feb. 24 (Bloomberg) -- U.S. durable goods orders fell 0.9 percent in January, the first drop in three months, as lower demand for planes and automobiles overshadowed a surge in capital equipment. Jobless claims rose from the lowest level in more than four years.

Orders excluding transportation equipment increased 0.8 percent, the Commerce Department said today in Washington, prompting economists at Morgan Stanley and RBS Greenwich Capital to say they may raise first-quarter economic growth forecasts.

Except for transportation, ``strength predominated,'' said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut, who predicted a 1.5 percent decline. ``I will probably be marking up my forecast for the investment component of GDP based on these numbers.''

First-time claims for unemployment insurance rose 9,000 to 312,000 last week, the Labor Department said today. The increase was the first in a month, and economists said claims remain low enough that hiring likely accelerated in February. Confidence in the economy is picking up as conditions improve and profits rise, according to a survey released today at the Business Council gathering of Fortune 500 executives in Boca Raton, Florida.

Demand for capital goods surprised several economists, with orders for electrical equipment, appliances and components rising 13 percent, the biggest jump ever.

Raising Forecasts

The economy may grow at about a 4 percent annual pace this quarter, up from a previous estimate of 3.3 percent, said David Greenlaw, Morgan Stanley's chief U.S. fixed income economist, in a note to clients. Economist Bill Mulvihill at Griffin, Kubik, Stephens & Thompson Inc. in Chicago said growth may be about 4.5 percent, up from the firm's 4.4 percent estimate.

``This report adds to our view that GDP growth remains robust in the first quarter'' at about 4 percent, David Rosenberg, chief economist for North America at Merrill Lynch & Co. in New York, wrote in a note. ``The 0.9 percent decline in headline durable- goods new orders was about the only soft number in this report.''

January's orders were expected to be unchanged, based on the median of 65 forecasts in a Bloomberg News survey. Durable goods orders rose a revised 1.4 percent in December and 2.8 percent excluding transportation, in both cases more than the government previously estimated, the Commerce Department said.

The benchmark 10-year Treasury note rose 1/32 point, pushing the yield down 1 basis point to 4.27 percent at 12:01 p.m.

Orders for non-defense capital goods excluding aircraft, an indication of business investment, rose 2.9 percent last month and are up 20 percent from January 2004. Capital spending and corporate borrowing ``have firmed noticeably,'' Federal Reserve Chairman Alan Greenspan the House Financial Services Committee last week.

Jobless Claims

The level of jobless claims suggests payroll employment is starting to accelerate. The economy probably added 225,000 workers in February, the most in four months, according to the median forecast in a separate Bloomberg survey before the March 4 report. Payrolls rose by 146,000 in January.

Claims were forecast to rise to 309,000, based on the median estimate. The four-week average of claims, a less volatile measure, fell to 308,750, the lowest since the week of Nov. 4, 2000, from 312,000.

The volume of help-wanted advertising in major U.S. newspapers rose last month to the highest level in almost two years, the New York-based Conference Board said today. The index increased to 41 during the month from December's 38.

``The low level of initial claims and the drop in continuing claims points to a pickup in hiring in February,'' said Wesley Beal, chief U.S. economist at IDEAglobal in New York. ``It looks like we're going to see more than 200,000 new jobs.''

Durable Goods

The January decline left the value of durable goods orders at $200.4 billion. Forecasts ranged from a decrease of 2 percent to an increase of 3.2 percent.

Orders for aircraft and other transportation equipment tend to be volatile, which is why economists focus on other numbers in the report to discern trends. Orders for transportation equipment fell 5.3 percent. Bookings for commercial aircraft fell 27 percent, and orders for military aircraft rose 57 percent after a 40 percent drop the prior month.

Bookings for motor vehicles and parts fell 3.8 percent after rising 4.9 percent in December. Sales at Ford Motor Co. and General Motors Corp., the two biggest U.S. automakers, fell last month as industrywide sales slipped from a three-year high of 18.4 million vehicles at an annual rate in December.

Executives

Shipments of non-defense capital goods excluding aircraft, an indication of business investment, which the government uses to calculate quarterly gross domestic product, rose 3.7 percent after rising 2.9 percent.

``The economy is showing some considerable signs of strength, from my vantage point,'' said David Goode, chairman and chief executive of Norfolk Southern Corp., in an interview at the Business Council meeting in Boca Raton. Norfolk is the fourth- largest U.S. railroad. ``I measure railroad-car loadings, and they're running ahead of this same time last year.''

Eighty-five percent of 76 chief executives polled by the Business Council said conditions are the same or better than they were six months ago. The same percentage expects their profits to rise over the next 12 months. The group didn't release a specific economic growth forecast.

``The economy is in good shape,'' said Clayton Jones, chairman and chief executive officer of Rockwell Collins Inc., in an interview at the Business Council meeting. ``Orders are up. They've been up continuously for the last year.''

Rockwell Collins, based in Cedar Rapids, Iowa, makes cockpit instruments for commercial and military aircraft.

To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@Bloomberg.net