Plus: U.S. Factory Orders Rise More than Forecast, Unemployment Rate Climbs Despite Strong Job Growth and Worker Productivity Increases.

U.S. Factory Orders Rise More than Forecast
Factory orders for the nation’s manufacturers rose for the fifth consecutive month in March, rising 3 percent after a 0.7 percent increase in February, the U.S. Department of Commerce reported last week. The March increase pushed total orders to $462.9 billion, up 31.2 percent from the recession low hit in March 2009. Excluding the often volatile transportation goods category, new orders climbed 2.6 percent, the eighth straight monthly gain.

The 3 percent jump in orders was ahead of economists’ average expectations of a 2 percent rise, according to Bloomberg News.

Orders for durable goods rose 2.9 percent in March to $209.5 billion following a 0.8 percent increase in February. “Orders for primary metals, machinery and electrical equipment all were higher in March, though orders fell for fabricated metal products and computers,” Reuters reports, noting that the weaker dollar has been both an aid to US exports and a factor in some companies’ decisions to continue ramping up production. Transportation equipment saw the largest increase, rising 6.2 percent to $54.9 billion.

Demand for non-durable goods rose 3.1 percent to $253.4 billion in March.

Joshua Shapiro, chief U.S. economist at MFR Inc., told the Associated Press that the solid March increase in factory orders showed the January-March quarter ended with momentum, an encouraging sign for future economic growth.

Shipments, up seven consecutive months, rose 2.7 percent to $461.4 billion. This followed a 0.6 percent February increase.

Unemployment Rate Climbs Despite Strong Job Growth
The national unemployment rate in the U.S. rose to 9 percent in April, up from 8.8 percent in March, despite posting strong job growth in the private sector, with 244,000 non-farm jobs added to the economy last month, according to the U.S. Department of Labor on Friday.

The disparity between the unemployment rate and job creation stems from differences in how the two figures are calculated, with household surveys used for unemployment data and business surveys for payroll data.

“The good news in the April jobs report was what didn’t happen,” the Washington Post reports. “Businesses and consumers have been groaning since the start of the year under the weight of higher prices for gasoline, food and other products made from commodities such as copper and iron. But private employers didn’t pull back. They continued to create jobs, confident that consumers will still go shopping.”

The largest hiring gains were in the retail sector, which added 57,000 new jobs, followed by professional and business services, which added 51,000 jobs. Meanwhile, manufacturing employment rose 29,000 in April, bringing the total number of manufacturing jobs added in 2011 to 141,000.

The Labor Dept. also revised its findings for February and March, putting net job gains above 200,000 for both months — a key threshold for driving down monthly unemployment. However, the job market remains challenging, and recent growth in payrolls has not made a significant dent in the large number of unemployed workers, which stood at 13.7 million in April. The proportion of the U.S. population with a job declined from 58.5 percent in March to 58.4 percent in April.

New initial jobless claims surged to 474,000 for the week ending April 30, a 43,000 increase and the highest weekly jobless figure in eight months, a separate Labor Dept. report found. The four-week moving average also rose, climbing 22,250 to reach 431,250. According to Bloomberg News, much of the gain may be attributed to seasonal variations, including a series of auto plant shutdowns caused by the recent disasters in Japan.

Worker Productivity Increased in Q1
U.S. workers’ productivity rose in the first quarter of 2011 as businesses strove to maintain efficiency gains, the U.S. Department of Labor reported last week. Employee output per hour increased at a 1.6 percent annual rate, down from a revised 2.9 percent in the fourth quarter of 2010.

The productivity gains were the result of goods and services output growing faster than hours worked. Real output for Q1 rose 3.1 percent while hours worked grew 1.4 percent. In the manufacturing sector, productivity increased 6.3 percent in Q1, with output climbing 9.7 percent and hours worked increasing 3.3 percent. Over the last four quarters, manufacturing productivity has risen 4.7 percent.

“Productivity has surged since 2009 largely because companies slashed millions of jobs while keeping their output of goods and service near the same levels,” MarketWatch explains. “Yet increases in productivity usually taper off when an economy recovers because existing workforces are unable to keep up with demand. Companies usually have to hire more workers or adopt new technologies to boost productivity once an economy is operating normally again.”

Employee compensation has not kept pace with the productivity gains. Hourly wages rose at an annualized rate of 2.6 percent in Q1 2011, but when adjusted for inflation, wages actually fell 2.5 percent, the steepest decline since the third quarter of 2008. Meanwhile, unit labor costs are on the rise.

“Labor costs rose 1.2 percent from the year-earlier quarter, the biggest year-to-year increase since the last three months of 2008,” Bloomberg News explains. “The number of hours worked increased in the first three months of the year from the previous quarter even as the pace of economic growth slowed, showing employers found it difficult to meet demand without more hiring.”

CEO Pay Jumped in 2010
Compensation received by chief executives of the biggest U.S. companies surged 11 percent over the past 12 months, to $9.3 million on average, according to a new report by the Wall Street Journal, based on findings of management consultancy Hay Group. Covering the 350 biggest companies that filed proxies between May 1, 2010, and April 30, 2011, the CEO compensation study measured CEO pay by total direct compensation, which includes salary, bonuses and the granted value of stock, stock options and other long-term incentives given for service in fiscal year 2010.

“For the surveyed CEOs, the sharpest pay gains came via bonuses, which soared 19.7 percent as profits recovered, especially in some hard-hit industries,” the Journal reports.

“Base salaries remained flat at $1.1 million, while annual incentive payments increased by 19.7 percent to $2.2 million, yielding a 12.8 percent increase in overall cash compensation at $3.4 million,” Hay Group said in a statement. “For the first time in two years, long-term incentives grew by 7.3 percent to $6.2 million.”

“The real story is under the hood of executive pay,” according to Irv Becker, national practice leader of the U.S. executive compensation practice at Hay Group. “Many companies have re-structured programs to align pay with performance by putting greater emphasis on performance-oriented long-term incentive programs.”

The report said profits and gains in share prices were up a median 17 percent and 18 percent, respectively, outpacing the gains in CEO compensation.