New orders received by U.S. factories jumped unexpectedly in March as businesses rebuilt inventories, pointing to continued strength in manufacturing, a government report released on Tuesday showed.

Orders for manufactured goods rose 1.3 percent after an upwardly revised 1.3 percent gain in February, initially reported as a 0.6 percent rise, the Commerce Department said.

Economists polled by Reuters were expecting a 0.1 percent decline.

When transportation orders were stripped out, orders surged 3.1 percent, the biggest gain in almost five years. Excluding defense, factory orders were up 1.3 percent.

Non-defense capital goods orders excluding aircraft, viewed as an indicator of business confidence, leaped 4.5 percent, the steepest increase since December 2007.

Durable goods orders fell 0.6 percent, the first decline in four months, but the decline was less than the originally reported 1.3 percent fall.

(Reporting by Mark Felsenthal, Editing by Andrea Ricci)

Manufacturing