WASHINGTON (TheBlaze/AP) — Orders to U.S. factories rose 2.1 percent in May, the Commerce Department announced Tuesday. April’s increase was revised higher to 1.3 percent from 1 percent.
Meanwhile, U.S. buyers snapped up new cars and trucks in June at a pace not seen since before the recession.
Most of the increase in factory orders in May was due to a big jump in volatile commercial aircraft demand. Businesses also ordered more machinery, computers, and household appliances.
A category of orders that’s viewed as a proxy for business investment plans — which excludes transportation and defense — rose 1.5 percent.
Manufacturing has struggled somewhat this year. U.S. factories have seen less demand for exports because of weaker global growth. And businesses reduced their investment in machinery and equipment in the first quarter.
The May report showed that orders for long-lasting goods, from power generation equipment to ships and boats, rose 3.7 percent in May. Orders for nondurable goods, including paper, chemicals and oil, rose 0.7 percent.
Demand for commercial aircraft surged nearly 51 percent, after an 18.4 percent gain in April and a drop of 43.3 percent in March.
Orders for autos and auto parts fell 2 percent, after jumping 4.1 percent in April. Still, the decline is likely temporary.
U.S. automakers on Tuesday reported healthy sales gains in June. Ford Motor Co.’s sales soared 13 percent in June compared with a year earlier. Chrysler’s sales rose 8 percent.
Continuing demand for big pickups helped boost sales for Detroit’s automakers.
Japanese automakers reported solid gains as well. Nissan’s sales jumped 13 percent, while Toyota’s and Honda’s each rose 10 percent. South Korea’s Hyundai reported a record June, with sales up 2 percent.
Only Volkswagen’s sales dropped 3 percent, the third straight monthly decline for the German car company as some products like the Jetta start to age.
The overall gain in factory orders follows another report that shows manufacturing activity picked up in June. The Institute for Supply Management’s index of manufacturing activity rose to 50.9 from 49. Any reading above 50 indicates expansion.
The ISM index showed that new orders and production both jumped. But a gauge of employment fell sharply, suggesting factories cut jobs for the fourth straight month.
The U.S. economy expanded at only a 1.8 percent annual rate in the first quarter of 2013, the Commerce Department said last week. That was much slower than its previous estimate of a 2.4 percent rate.
The main reason for the downgrade was consumers spent less on services than initially thought. Spending on long-lasting factory goods, such as cars and appliances, was stronger.
Economists expect growth remained tepid in the April-June quarter. Most estimates range between a rate of 1.5 percent and 2 percent.
Trading was mostly lower Tuesday:
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