(Bloomberg) -- Orders placed with US factories for business equipment rose modestly in March, indicating firms are cautious about demand prospects and tempering investment.

The value of core capital goods orders, a proxy for investment in equipment excluding aircraft and military hardware, increased 0.2% last month after a downwardly revised 0.4% advance in February, Commerce Department figures showed Wednesday. The data aren’t adjusted for inflation.

Bookings for all durable goods — items meant to last at least three years and including orders for commercial aircraft — rose 2.6%, also following a downward revision. The median estimate in a Bloomberg survey of economists called for a 2.5% increase.

Excluding transportation equipment, orders climbed 0.2%. 

The gain in overall durables orders was broad and included increases in motor vehicles and computers and electronic products. New orders for capital goods were much stronger on the back of firmer commercial aircraft and defense-related bookings.

The second-straight increase in core capital goods orders points to some stabilization in equipment investment that’s been a drag on gross domestic product in four of the last five quarters. Though firms are cautious about capital spending, many are seeking to enhance productivity amid elevated input costs.

Core capital goods shipments, a figure that reflects spending and is used to help calculate equipment investment in the government’s gross domestic product report, rose 0.2% after falling in February.

The first estimate of first-quarter GDP is due on Thursday. Before the durables report, the Federal Reserve Bank of Atlanta’s GDPNow forecast was penciling in a modest decline in business equipment spending for the quarter.

Commercial Aircraft

The Commerce Department’s report showed bookings for commercial aircraft, which are volatile from month to month, jumped almost 31%, roughly double the February gain.

Boeing Co. reported 113 orders in March, up from 15 in February. Chief Executive Officer Dave Calhoun announced last month he’s stepping down at the end of the year, part of a sweeping leadership overhaul as the planemaker struggles to get a handle on a safety crisis.

While often helpful to compare the two, aircraft orders are volatile and the government data don’t always correlate with the planemaker’s monthly figures.

Recent purchasing managers surveys have sent mixed signals for US manufacturing. The Institute for Supply Management’s manufacturing gauge earlier this month showed factory activity expanded in March for the first time since September 2022, while the S&P Global flash April PMI contracted for the first time in four months.

--With assistance from Kristy Scheuble.

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