U.S. factory orders in March exceeded expectations across the board, with the AI boom driving a manufacturing recovery.

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U.S. factory orders for March increased more than expected, driven primarily by a surge in demand for electronic products amid the AI investment boom. The latest data shows an overall recovery in manufacturing demand.

The U.S. Department of Commerce’s Census Bureau reported on Monday that factory orders rose 1.5% month-over-month in March, the largest monthly gain since November last year, and February’s figure was revised up to a 0.3% increase month-over-month. The median forecast of economists surveyed by the media was a 0.6% rise. Year-over-year, March orders grew by 3.7%.

Excluding transportation equipment, factory orders also exceeded expectations, rising 1.6% month-over-month, higher than the expected 1.3% and the previous value of 1.2%, suggesting that the recovery in orders was not solely driven by transportation, but that basic manufacturing demand is expanding as well.

As for durable goods orders, the final figure for March rose 0.8% month-over-month, matching both the expectation and previous reading, confirming the preliminary data and showing no need for revision. Excluding transportation, the final value for durable goods orders was 0.9%, with actual, expected, and previous figures all matching, reflecting steady core durable goods demand.

The "core capital expenditure" proxy most watched by the market—non-defense capital goods orders excluding aircraft—grew by 3.4% in the final March reading, slightly surpassing the expected 3.3%, with the previous value also at 3.3%. This indicator is often regarded as a barometer of corporate equipment investment willingness, and its strength suggests that company capital expenditures are improving.

Non-durable goods orders rose 2.1%, reaching the highest level since October 2022.

The increase in March orders was mainly driven by computers and electronics, with orders in this category reaching a 25-year high, climbing 3.6% to $29.6 billion—the highest since March 2001. Notably, new orders for medical electronics, measuring and control instruments surged 7.9% to $10.6 billion, setting a record high.

Manufacturing accounts for 10.1% of the U.S. economy. After being severely hit by massive tariff policies under President Trump, there have recently been signs of a recovery. However, multiple industry reports show that the U.S.-Iran war is driving raw material input costs rapidly higher—oil prices have risen nearly 50% cumulatively, and supplier delivery times are continuing to lengthen. Even so, U.S. manufacturing still displays a certain degree of resilience under pressure.

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