New orders for U.S. manufactured goods rose 1.9 percent in May, buoyed by a jump in aircraft sales, and the Commerce Department revised its estimate of first quarter GDP growth.
The increase followed a drop of 2.7 percent in April, when orders were affected by a slow month for aircraft orders and automotive supply chain disruptions following the Japan earthquake.
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Excluding the volatile transportation section, durable goods orders increased 0.6 percent after a revised 0.4 percent drop in April that had previously been estimated at a 1.6 percent decline. Economists polled by Reuters had predicted a rise of 0.9 percent.
Durable goods orders are a leading indicator of manufacturing health. They are closely watched in the transportation industry as a gauge of future freight demand.
Aircraft orders, which often take sharp month-to-month swings rose 36.5 percent. Boeing reported 27 aircraft orders, compared with two in April. Motor vehicle orders rose 0.6 percent after plunging 5.3 percent the previous month.
The May report had a “generally positive tenor” amid a string of shaky economic reports, said Cliff Waldman, economist for the manufacturers Alliance/MAPI.
“All told, these data square with other reports that show moderating manufacturing activity amidst disconcerting weakness in the U.S. economy,” Waldman said. “The factory sector will continue to grow faster than the U.S. economy as a whole. Manufacturing, however, cannot escape the risks borne of a troubled U.S. rebound and a world full of slowdowns and crises.”
The Commerce Department said gross domestic product, a measure of overall economic activity, rose at an annual rate of 1.9 percent in the first quarter, up from the previously estimated 1.8 percent. The economy expanded at a 3.1 percent rate in the fourth quarter.