New durables-manufactured goods orders fell 1.3 percent in March, but excluding transportation, orders rose 2.8 percent. The overall drop was driven by a large decline in aircraft orders. The aircraft orders are volatile and not driven as much by overall economic trends. These results are consistent with our March forecast where we projected relatively strong business sector spending for most of 2010.

Core (non-defense and non-aircraft) capital goods orders rose by 4 percent. Metals, machinery, computers and electronic, and electric/appliance orders all increased with strength. Fabricated metals orders were down a bit.

These numbers are encouraging. With manufacturing’s large multiplier, the improvement will contribute to overall economic activity. We note that broader measures of the business sector, Industrial Production and Capacity Utilization have been improving, continuing a trend since June of 2009.