Robust transportation demand buoys orders for durable goods

Demand for long-lasting manufactured goods surged in February, though a gauge of planned business spending slipped after surging the previous month, suggesting factory activity continued to expand at a moderate pace.

Durable goods orders jumped 5.7 percent as demand for transportation equipment rebounded strongly, the Commerce Department said on Tuesday. The rise last month in durable goods orders, which range from toasters to aircraft, reversed January's 3.8 percent plunge.

Economists polled by Reuters had expected orders to rise 3.8 percent after a previously reported 4.9 percent fall in January.

Excluding transportation, orders slipped 0.5 percent after increasing 2.9 percent in January. Economists had expected a 0.5 percent rise.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 2.7 percent, the largest decline since July. Orders for the so-called core capital goods had jumped 6.7 percent in January and economists had expected a 1.2 percent drop last month.

However, core capital goods shipments, used to calculate equipment and software spending in the gross domestic product report, increased 1.9 percent. That followed a 0.7 percent fall in January and suggested business spending would again contribute to growth this quarter.

Though the report was mixed, it was in line with other data, including industrial production and the Institute for Supply Management's survey of national factory activity, that have shown a steady growth pace in manufacturing.

Overall orders for durable goods were buoyed by a 21.7 percent jump transportation equipment as demand for civilian aircraft surged 95.3 percent.

Boeing received orders for 179 aircraft, up from only two in January, according to information posted on its website. They were boosted by American Airlines, which placed 143 orders, including 42 for the grounded 787 Dreamliners.

Motor vehicle orders increased 3.8 percent. Defense aircraft orders rose 7.6 percent.

(Reporting by Lucia Mutikani; Editing by Neil Stempleman)