Factory Orders Rise, ISM Non-Manufacturing Expands at Slower Pace

- Factory Orders for February rose 1.0% versus estimates of a 1.8% gain and a -5.7% decline in January.
- ISM Non-Manufacturing for March fell to 52.4 versus estimates of 55.0 and a reading of 54.3 in February.

BOTTOM LINE: Orders placed with US factories rose in February, paced by a jump in aircraft, Bloomberg reported. Excluding transportation equipment, bookings fell .4%. Civilian aircraft orders soared 88.0%. Metals orders dropped 3.8%, the most since October 2004. Orders for computers and electronic products rose 4.5%. Auto bookings rose 1.1%. Orders for capital goods excluding aircraft and military equipment, a gauge of future business investment, declined 2.4%. I expect Durable Goods Orders to rise again next month as companies gain more confidence in the sustainability of the current expansion.

Service industries expanded at a slower pace last month, Bloomberg reported. The Prices Paid component of the index rose to 63.3 from 53.8 the prior month. The New Orders component fell to 53.8 from 54.8 the prior month. The employment component of the index fell to 50.8 versus 52.2 the prior month. However, the Backlogs component of the index surged to 52.5 from 47 the prior month. I expect Service activity to strengthen as spring progresses and the ISM Non-manufacturing index to bounce back to more average levels.