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U.S. Durable Goods Orders Probably Rebounded on Aircraft

Photographer: Victor J. Blue/Bloomberg

Refrigerators are displayed for sale at a Sears Holdings Corp. store in Jersey City, New Jersey. Close

Refrigerators are displayed for sale at a Sears Holdings Corp. store in Jersey City, New Jersey.

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Photographer: Victor J. Blue/Bloomberg

Refrigerators are displayed for sale at a Sears Holdings Corp. store in Jersey City, New Jersey.

Orders for U.S. durable goods probably rebounded in February as aircraft demand surged, economists said before a report today.

Bookings for goods meant to last at least three years rose 3 percent after dropping 3.7 percent the prior month, according to the median forecast of economists surveyed by Bloomberg News. Excluding transportation equipment, demand climbed 1.7 percent after falling 3 percent, economists projected.

Growing auto sales and the need to update business equipment are bolstering production, prompting gains in employment that are keeping factories as a source of strength in the expansion. Nonetheless, higher fuel costs and slowdowns in Europe and China may limit manufacturing this year.

“Manufacturing has certainly benefited from the surge in demand for cars,” said Harm Bandholz, chief U.S. economist at UniCredit Group in New York. “Coming out of this recession, there has been a lot of pent-up demand.”

The Commerce Department will report the durables figures at 8:30 a.m. in Washington. Estimates of the 83 economists surveyed by Bloomberg ranged from a drop of 1.4 percent to a gain of 6.4 percent.

An increase in airplane bookings probably contributed to the advance, economists said. Boeing Co., the largest U.S. aircraft maker, said it received orders for 237 planes last month, up from 150 in January.

Photographer: Stuart Isett/Bloomberg

An employee works on a Boeing 787 Dreamliner at the company's factory in Everett, Washington. Close

An employee works on a Boeing 787 Dreamliner at the company's factory in Everett, Washington.

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Photographer: Stuart Isett/Bloomberg

An employee works on a Boeing 787 Dreamliner at the company's factory in Everett, Washington.

Capital Goods

Orders for non-military capital goods excluding aircraft, a proxy for business investment in items such as computers, engines and communications gear, advanced 1.5 percent after a 4.5 percent decline, according to the median forecast.

An increase in orders last month would extend a pattern of declines at the start of a quarter that are later reversed. Since the end of 2005, orders for non-defense capital goods have dropped in the first month of a quarter in all but three occasions.

Auto manufacturing has been powering factory growth. Cars last month sold at the fastest pace in four years, led by Chrysler Group LLC and a surprise gain from General Motors Co. (GM) Light-vehicle sales accelerated to a 15 million annual rate, the strongest since February 2008, according to data from Ward’s Automotive Group.

“Based on what we see in terms of pent-up demand and importantly the strength of the economy, we do not believe that short-term fluctuations in pump prices will curtail industry growth this year,” Don Johnson, vice president of U.S. sales operation for GM, said on a March 1 conference call. “American consumers and the overall economy are in much better shape than they were a year ago.”

Gasoline Prices

A gallon of regular unleaded gasoline has increased since the end of 2011, rising to a 10-month high of $3.90 as of March 26, according to AAA, the nation’s largest automobile group.

Other gauges show manufacturing continued to expand this month even as orders eased. Regional reports from the Federal Reserve show manufacturing accelerating in the New York and Philadelphia areas, while bookings cooled.

Those gains help explain why shares of machinery makers have outpaced the broader stock market this year. The Standard & Poor’s Machinery Supercomposite (S15MACH) Index (SPX), which includes companies like Cummins Inc. and Caterpillar Inc., has climbed 17 percent so far this year, compared with a 13 percent increase for the S&P 500 Index.

Recent “better news” on the economy has included a “slight bit of encouraging news here and there in the housing market” as well as strength in manufacturing, Federal Reserve Chairman Ben S. Bernanke this week said in response to audience questions following a speech in Arlington, Virginia.

At the same time, rising oil prices may increase the cost of production for some manufacturers. Crude oil futures on the New York Mercantile Exchange have climbed 8.6 percent this year, reaching $107.33 a barrel yesterday, after surging 25 percent in the last three months of 2011.

                        Bloomberg News

======================================================
                          Durables Durables Cap Goods
                            Orders Ex-Trans      Core
                              MOM%     MOM%      MOM%
======================================================

Date of Release              03/28    03/28     03/28
Observation Period            Feb.     Feb.      Feb.
-----------------------------------------------------
Median                        3.0%     1.7%      1.5%
Average                       2.8%     1.6%      1.8%
High Forecast                 6.4%     3.0%      3.5%
Low Forecast                 -1.4%     0.4%      1.0%
Number of Participants          83       53        11
Previous                     -3.7%    -3.0%     -3.9%
-----------------------------------------------------
4CAST                         3.0%     1.5%      1.3%
ABN Amro                      2.9%     ---       ---
Action Economics              2.0%     2.4%      ---
Aletti Gestielle              3.0%     ---       ---
Ameriprise Financial          2.8%     1.4%      ---
Banca Aletti                  3.0%     ---       ---
Banesto                       3.3%     ---       ---
Bank of Tokyo-Mitsubishi      2.8%     ---       ---
Bantleon Bank AG              2.9%     1.5%      ---
Barclays Capital              3.0%     2.5%      ---
Bayerische Landesbank         3.5%     1.8%      ---
BBVA                          2.2%     1.0%      ---
BMO Capital Markets           2.2%     0.5%      ---
BNP Paribas                   2.9%     1.4%      ---
BofA Merrill Lynch            4.0%     2.0%      ---
Briefing.com                  2.5%     0.5%      ---
Capital Economics             5.5%     1.7%      ---
CIBC World Markets            3.5%     2.0%      ---
Citi                          0.5%     1.7%      ---
ClearView Economics           1.0%     ---       ---
Comerica                      1.5%     ---       ---
Commerzbank AG                4.0%     2.0%      ---
Credit Agricole CIB           3.0%     2.4%      ---
Credit Suisse                 4.5%     2.0%      3.0%
Daiwa Securities America      ---      2.0%      ---
Danske Bank                   2.7%     ---       ---
DekaBank                      2.5%     0.6%      1.0%
Desjardins Group              3.3%     ---       ---
Deutsche Bank Securities      4.0%     2.5%      ---
Deutsche Postbank AG          3.0%     2.5%      ---
DZ Bank                       1.2%     0.9%      ---
Exane                         2.1%     2.0%      ---
Fact & Opinion Economics      3.5%     ---       ---
First Trust Advisors          6.4%     2.5%      ---
FTN Financial                 2.0%     1.0%      ---
Helaba                        3.0%     ---       ---
High Frequency Economics      2.0%     1.0%      ---
HSBC Markets                  3.3%     0.9%      1.4%
Hugh Johnson Advisors         2.0%     ---       ---
IDEAglobal                    3.0%     2.5%      ---
IHS Global Insight            4.2%     ---       3.5%
Informa Global Markets        4.2%     ---       ---
ING Financial Markets         2.0%     1.1%      ---
Insight Economics             3.0%     ---       ---
Intesa Sanpaulo               2.8%     2.2%      ---
J.P. Morgan Chase             2.8%     2.6%      1.2%
Janney Montgomery Scott       1.5%     0.8%      ---
Jefferies & Co.               3.5%     ---       ---
Landesbank Berlin             4.6%     0.6%      ---
Landesbank BW                 3.5%     ---       ---
Market Securities             2.4%     ---       ---
MET Capital Advisors          0.4%     ---       ---
Mizuho Securities             1.5%     2.0%      ---
Moody’s Analytics             1.5%     1.2%      ---
Morgan Keegan & Co.          -1.4%     ---       ---
Morgan Stanley & Co.          2.8%     ---       ---
National Bank Financial       2.0%     1.9%      ---
Natixis                       2.0%     1.0%      ---
Nomura Securities             3.2%     2.5%      ---
Nord/LB                       3.2%     2.0%      ---
OSK Group/DMG                 3.0%     ---       ---
O’Sullivan                    3.8%     1.8%      2.0%
Parthenon Group               4.4%     0.4%      ---
Pierpont Securities           3.6%     ---       ---
PineBridge Investments        3.0%     3.0%      ---
PNC Bank                      1.2%     1.5%      ---
Raiffeisenbank International  3.5%     0.9%      ---
Raymond James                -0.4%     1.0%      1.2%
RBC Capital Markets           2.0%     1.0%      ---
RBS Securities                3.0%     ---       2.0%
Scotia Capital                4.0%     2.0%      ---
SMBC Nikko Securities         2.9%     1.0%      ---
Societe Generale              2.9%     1.6%      1.8%
Standard & Poor’s             2.0%     2.4%      ---
Standard Chartered            4.5%     2.8%      ---
Stone & McCarthy Research     3.3%     ---       ---
TD Securities                 2.5%     ---       ---
UBS                           1.8%     1.0%      1.5%
UniCredit Research            3.0%     ---       ---
University of Maryland        1.5%     ---       ---
Wells Fargo & Co.             3.4%     1.2%      ---
WestLB AG                     3.0%     ---       ---
Westpac Banking Co.           1.5%     ---       ---
Wrightson ICAP                4.5%     ---       ---
======================================================

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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