Orders to U.S. factories rise on demand for machinery, computers

Orders placed with U.S. factories rose in May, reflecting broad-based gains that signal manufacturing is stabilizing.

The 2.1% gain in bookings followed a revised 1.3% advance the prior month, the Commerce Department reported today in Washington. The median forecast of 61 economists in a Bloomberg survey called for a 2% increase. Demand for capital equipment increased more than the government estimated last week.

Sales of motor vehicles, gains in residential construction, and a boom in domestic energy production are helping make up for weakness in U.S. export markets. A pickup in business investment in new equipment and improving consumer demand would help bolster manufacturing and the expansion in the second half of 2013.

“If you look at manufacturing in general it’s been in one of the biggest expansionary tracks we’ve seen,” Drew Matus, deputy U.S. chief economist at UBS Securities LLC in Stamford, Connecticut, said before the report. “The U.S. seems like it’s doing much better than the rest of the world.”

Estimates in the Bloomberg survey ranged from a 1% drop to a 4.9% gain after a previously reported 1% advance in April.

Factory orders excluding the volatile transportation component climbed 0.6% after a 0.2% increase the prior month, the Commerce report showed.

Bookings for commercial aircraft jumped 50.8% after climbing 18.4% in April. Chicago-based Boeing Co. received 232 aircraft orders in May after 51 in April.

Durable Goods

Bookings for durable goods, which make up more than half of total factory demand, rose 3.7%. Today’s reading was little changed from the 3.6% gain the Commerce Department initially estimated on June 25.

Orders for non-durable goods including petroleum climbed 0.7%. The gain in non-durables reflected gains in fuel and chemicals, today’s report showed. Because the figures aren’t adjusted for inflation, they’re often influenced by changes in prices rather than shifts in demand.

Bookings for capital goods excluding aircraft and military equipment, an indicator of future business investment, increased 1.5% in May, a third consecutive advance. The reading was revised up from the government’s first estimate last week which showed a 1.1% gain.

Shipments of those goods, used in calculating gross domestic product, rose 1.9% in May, also more than estimated last week, after a 2.1% drop in April.

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