New orders received by U.S. factories bounced back in May, boosted by demand for transportation equipment and a range of other products, pointing to underlying strength in manufacturing.
The Commerce Department said on Tuesday orders for manufactured goods rose 0.8 percent after a 0.9 percent fall in April. Economists had forecast factory orders rebounding 1.0 percent in May.
Manufacturing is leading the economic recovery, with data on Friday showing a pick-up in the sector as the Institute for Supply Management's manufacturing index rose to 55.3 in June from 53.5 in May.
Details of the May factory orders report suggested an easing in supply chain disruptions after the March earthquake in Japan that had hampered factory activity.
The Commerce Department report showed orders excluding transportation edged up 0.2 percent in May after a similar gain the prior month.
Unfilled orders at U.S. factories rose 0.9 percent in May, the biggest increase since September, after a 0.6 percent gain in April. Shipments edged up 0.1 percent after falling 0.4 percent in April. Inventories at U.S. factories increased 0.8 percent in May to $593.0 billion, the highest level since the series started in 1992.
The department revised durable goods orders for May to show a bigger 2.1 percent rise rather than the previously reported 1.9 percent increase. Excluding transportation, orders for durable goods were up 0.7 percent in May instead of 0.6 percent.
The increase in orders for non-defense capital goods excluding aircraft, seen as a measure of business confidence, was unrevised at 1.6 percent.