Factory goods orders fall, but trend points to recovery

New orders for U.S.-made goods fell in November, weighed down by a plunge in the volatile civilian aircraft category, but the underlying trend suggested manufacturing is gradually firming.

Factory goods orders declined 2.4 percent, the Commerce Department said on Friday after an upwardly revised 2.8 percent increase in October. November's drop followed four straight months of gains and was the biggest decline since December 2015.

Economists polled by Reuters had forecast factory orders decreasing 2.2 percent in November after a previously reported 2.7 percent gain in October.

The department also said orders for non-defense capital goods excluding aircraft -- seen as a measure of business

confidence and spending plans -- rose 0.9 percent in November as reported last month.

Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross

domestic product report, gained 0.2 percent in November as previously reported.

A report this week showed factory activity hitting a two-year high in December, driven by a surge in new orders.

Manufacturing, which accounts for about 12 percent of the economy, is gaining some muscle after a prolonged period of decline, spurred by a strong dollar and lower oil prices. The sector is getting a lift from rising oil prices, which have led to an increase in well drilling.

Still, manufacturing remains constrained by dollar strength.

In November, orders for transportation equipment tumbled 13.2 percent, the largest drop since August 2014, reflecting a 73.8 percent decline in civilian aircraft orders.

Orders for primary metals jumped 2.2 percent, the biggest rise since December 2015. Machinery orders increased 1.4 percent, the largest gain since January last year.

There were increases in orders for computers and electronic products, and electrical equipment, appliances and components.

Shipments of overall factory goods slipped 0.1 percent in November after rising 0.2 percent the prior month. Inventories of factory goods increased 0.2 percent. That left the inventories-to-shipments ratio unchanged at 1.34 in November.

Unfilled orders at factories dipped 0.1 percent after rising 0.8 percent in October.

(Reporting by Lucia Mutikani, Editing by Andrea Ricci)