Orders for long-lasting US manufactured goods rebounded less than expected in March as demand for automobiles, computers and electrical goods slumped, suggesting the downturn in the factory sector was far from over.

The country’s Commerce Department said that orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, increased 0.8% last month after declining 3.1% in February.

Non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, were unchanged after a downwardly revised 2.7% decrease in the prior month. These so-called core capital goods orders were previously reported to have decreased 2.5% in February.

Economists polled by Reuters had forecast durable goods orders advancing 1.8% last month and orders for manufactured capital goods increasing 0.8%.

Prices of US Treasuries pared losses and US stock futures gave up some gains after the data. The dollar was trading lower against a basket of currencies.

The report came as Federal Reserve officials prepared to gather for a two-day policy meeting. The US central bank is expected to leave its benchmark overnight interest rate unchanged tomorrow. It hiked interest rates in December for the first time in nearly a decade.

While most manufacturing surveys have painted a fairly upbeat picture of the sector in recent months as a dollar rally fizzled, so-called hard data such as industrial production and factory orders have remained depressed.

Manufacturing, which accounts for 12% of the US economy, is struggling with the lingering effects of the dollar's past surge and sluggish overseas demand.

So far this year, the dollar is down 2.7% against the currencies of the United States' main trading partners. It gained 20% between June 2014 and December 2015.

Factories also have been hurt by deep spending cuts on capital projects by oilfield service firms like Schlumberger and Halliburton as well as efforts by businesses to sell a stockpile of unwanted inventory.

The rise in durable goods orders last month was led by a 65.7% jump in defence aircraft orders, which lifted bookings for transportation equipment 2.9%.

Orders for civilian aircraft fell 5.7% despite Boeing reporting on its website that it had received orders for 69 aircraft last month, up from two in February.

Orders for motor vehicles and parts fell 3%. Demand for automobiles has softened in recent months after sales hit a record high in 2015.

There were increases in orders for primary metals and machinery. Orders for computers and electronic products fell as did those for electrical equipment, appliances and components.

Despite manufactured capital goods orders being flat last month, shipments of core capital goods - used to calculate equipment spending in the gross domestic product report – rose 0.3% after slumping 1.8% in February.

Tepid shipments are in line with soft data on retail sales, trade, industrial production and business spending that have suggested economic growth slowed further in the first quarter. The economy grew at an anaemic 1.4% annualised rate in the fourth quarter.

First-quarter gross domestic product growth estimates are as low as a 0.3% rate. The government will publish its advance first-quarter GDP growth estimate on Thursday.

Unfilled durable goods orders dipped 0.1% in March. Order books have declined in three of the last four months. Durable goods inventories were unchanged after two straight months of decreases.