Orders for U.S. capital goods rose in August more than previously estimated, a sign companies are replacing outdated equipment. Total bookings dropped, pulled lower by a decline in demand for aircraft, Bloomberg reported.

Orders for non-military capital goods excluding airplanes increased 5.1 percent, the biggest gain since March and exceeding the 4.1 percent estimated last month, according to a report released today by the U.S. Commerce Department.

Manufacturing will remain at the forefront of the recovery as companies use their large cash reserves to update equipment and cut costs. Federal Reserve Bank of New York President William Dudley last week said more monetary easing is probably needed to spur growth and avert deflation, according to Bloomberg said.

“Capital spending is clearly trending higher,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. “You generally get a strong recovery in capital spending with a more noticeable improvement in hiring than what we’re seeing. It looks like the spring weakness was a temporary soft patch.”

A report from the National Association of Realtors showed pending sales of existing homes climbed more than forecast in August. Signed contracts increased 4.3 percent after a 4.5 percent rise in July, indicating housing demand is stabilizing after reaching record lows. The median forecast of economists surveyed projected a 2.5 percent increase.

The increase in orders for capital goods excluding aircraft and military equipment, a measure of future business investment, followed a 5.3 percent drop in July. The Commerce Department’s 4.1 percent initial estimate was reported in the Sept. 24 report on durable goods.

The durable-goods report prompted economists at Morgan Stanley to raise their estimate for third-quarter growth in business investment in equipment and software to 11.5 percent from 5 percent and to boost their forecast for economic growth by a half percentage point. Business spending surged at a 25 percent rate in the second quarter, the biggest gain since 1983.