By Bob Willis May 4 (Bloomberg) -- Orders placed with U.S. factories unexpectedly rose in March, propelled by demand for capital equipment and petroleum that signals the U.S. expansion gained speed at the end of the first quarter. The 1.3 percent increase in bookings matched the prior month’s gain, which was more than twice as large as previously estimated, the Commerce Department said today in Washington. Sales climbed 2.2 percent, the most since November 2007. Texas Instruments Inc. and Caterpillar Inc. are among companies ramping up output to meet rising foreign and domestic demand as the global economy rebounds from last year’s recession. Inventory replenishment and more jobs in the U.S. may prompt factories to keep boosting output in coming months. “A lot of manufacturers may be struggling to keep up with demand,” Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, said before the report. “We’re seeing clear demand improvements from both consumers and businesses that should provide a strong tailwind for several months at least.” Pending sales of previously owned houses increased 5.3 percent in March, a report from the National Association of Realtors also showed today. Buyers are rushing to beat a June 30 deadline for closing on deals in order to receive up to $8,000 in government tax credits. Total factory orders were forecast to be little changed after a previously reported 0.6 percent gain the prior month, according to the median forecast of 67 economists surveyed by Bloomberg News. Projections ranged from a drop of 1 percent to an increase of 1 percent. Excluding Transportation Orders excluding volatile transportation goods, such as aircraft, jumped 3.1 percent, the most since August 2005. Demand for durable goods, which make up just over half of total factory demand, decreased 0.6 percent, depressed by a 67 percent slump in orders for civilian aircraft. Bookings for non-durable goods, including food, petroleum and chemicals, increased 2.9 percent, led by a 7.5 percent gain at petroleum refineries. The average price for a barrel of crude oil traded on the New York Mercantile Exchange rose to $81.29 in March from $76.45 in February. Bookings for capital goods excluding aircraft and military equipment, a measure of future business investment, increased 4.5 percent, more than estimated last week in the government’s report on durable goods. Shipments of those goods, used to calculate gross domestic product, rose 2.3 percent, also more than estimated last week. Business Investment Flush with profits, businesses are spending more on equipment. Business investment rose at a 13 percent annual rate in the first quarter after a 19 percent surge at the end of 2009, the government reported last week. Texas Instruments Inc., the second-largest U.S. chipmaker, posted a 54 percent gain in first quarter sales and predicted second-quarter sales and profits that topped analysts’ estimates, helped by demand for semiconductors used in industrial machinery, phone networks and cars. “Our production output is at an all-time high, and we have a multi-year ramp in capacity under way that will allow us to support our customers,” Chief Financial Officer Kevin March said in a conference call on April 26. Caterpillar Inc. is seeing surging orders from abroad. Its industrial machinery sales to Asia-Pacific soared 40 percent while shipments to Latin America rose 7 percent and North America sales fell 15 percent in the first quarter, the company reported last month. ‘Good Bounce’ “We’re seeing a pretty good bounce in investor confidence around the world in terms of our customers, particularly those in the emerging-market theaters around the world,” Caterpillar Chief Executive Officer Jim Owens said in a Bloomberg Television Interview on April 26. Factory inventories climbed 0.3 percent after a 0.7 percent gain the prior month that was larger than previously estimated. Manufacturers had enough goods on hand to last 1.27 months at the current sales pace, the fewest since August 2008. Exports rose in February to the highest level since October 2008, the Commerce Department reported last month. Manufacturing last month expanded at the fastest pace since 2004, according to a national survey of purchasing managers yesterday. To contact the reporters on this story: Bob Willis in Washington at bwillis@bloomberg.net;

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