Orders for long-lasting U.S. 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 Commerce Department said on Tuesday that orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, increased 0.8 percent last month after a downwardly revised 3.1 percent decline in February. Orders for durable goods were previously reported to have dropped 3.0 percent in February. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, were unchanged after a downwardly revised 2.7 percent decline in the prior month. These so-called core capital goods orders were previously reported to have decreased 2.5 percent in February.

Economists polled by Reuters had forecast durable goods orders advancing 1.8 percent last month and orders for manufactured capital goods increasing 0.8 percent. While most manufacturing surveys have painted a fairly upbeat picture of the sector in recent months as the dollar rally fizzles, so-called hard data such as industrial production and factory orders have remained depressed. Manufacturing, which accounts for 12 percent of the U.S. economy, is struggling with the lingering effects of the dollar's past surge and sluggish overseas demand. Deep spending cuts on capital projects by oilfield service firms like Schlumberger and Halliburton in the aftermath of a prolonged tumble in oil prices, and efforts by businesses to sell a stockpile of unwanted inventory are also hurting factories. The rise in durable goods orders last month was led by a 65.7 percent jump in defense aircraft orders, which lifted bookings for transportation equipment 2.9 percent.