New orders for long-lasting U.S. manufactured goods rose more than expected in May as bookings for transportation equipment rebounded strongly, according to a government report on Friday that could allay fears of a sharp slowdown in factory activity.
The Commerce Department said durable goods orders increased 1.9% after a revised 2.7% drop in April, which was previously reported as a 3.6% fall.
Economists polled by Reuters had expected orders to rise 1.5% last month.
Durable goods orders are a leading indicator of manufacturing and the report, which showed improvement across the board, pointed to underlying strength in a sector that has powered the economic recovery, even though recent regional factory data has shown some signs of fatigue.
Orders were a buoyed by a 36.5% jump in volatile aircraft bookings. Boeing received 27 aircraft orders, up from just two in April, according to information posted on the plane maker's website.
Motor vehicle orders rose 0.6% after plunging 5.3% the previous month, suggesting some improvement in auto production, which has been hit by a shortage of parts from Japan.
Excluding transportation, durable goods orders increased 0.6% after a revised 0.4% decline in April, previously reported as a 1.6% fall. Economists had expected this category to rise 0.9%.
Outside of transportation, orders for machinery, primary metals, capital goods, computers and electronic products all rose.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rebounded to increase 1.6% last month after a revised 0.8% fall in April.
Economists had expected a 1.0% increase from a previously reported 2.3% drop.
Shipments of non-defense capital goods orders excluding aircraft, which go into the calculation of gross domestic product, increased 1.4% after falling 1.5% in April.