May factory orders rise 0.8% to $445.3B

7/6/2011

WASHINGTON -- Businesses requested more airplanes, autos, and oil drilling equipment in May, pushing factory orders up after a sluggish spring and suggesting that supply disruptions stemming from the Japan crisis are fading.

The Commerce Department said Tuesday that orders for manufactured goods rose 0.8 percent after a 0.9 percent fall in April. Economists had forecast a 1.0 percent rebound.

The increase pushed orders to $445.3 billion -- almost 32 percent higher than at the low point of the recession in March, 2009.

Much of the increase was a 36.5 percent rise in orders for aircraft, a volatile sector. But there were signs of strength in areas that had slowed sharply in the previous month.

Auto and auto parts orders rose 2 percent. And a measure of business investment rose 1.6 percent, after falling 0.4 percent the previous month. Companies invested more in computers and equipment.

Orders for so-called nondurable goods, such as food, clothing, oil, and plastics, fell 0.2 percent in May. But that was partly because oil prices dropped.

The report showed that orders excluding transportation edged up 0.2 percent in May after a similar gain the prior month.

Unfilled orders rose 0.9 percent, the biggest increase since September, after a 0.6 percent gain in April.

Until this spring, manufacturing had been one of the strongest sectors of the economy since the recession ended two years ago.

"There are encouraging signs that the second half will likely get better, particularly for manufacturers," said Ryan Sweet, an economist at Moody's Analytics.

A recovery in the auto sector is one reason production is up. Japanese automakers with plants in the United States, such as Toyota Motor Corp., Honda Motor Co., and Nissan Motor Co., sharply cut production in the spring. But they are restoring output.