Increased demand for U.S.-made goods in May

Drill bits sit in drawers at the Memac Industries Inc. facility in Lancaster, Ohio. (Ty Wright / Bloomberg)

Factories got a vote of confidence in May, with customers placing more orders for U.S.-made goods after two months of declines, according to the government.

But the 0.7% uptick in demand to $469 billion in new orders may not mask an overall decline in the manufacturing sector, which many analysts have pegged as a key driver for economic growth.

The Commerce Department's report Tuesday showed a 1.3% increase in new demand for durable goods such as transportation and electrical equipment.

But more often than not this year, orders have fallen. Customers from debt-mired Europe and China, whose growth is slowing, are less inclined to turn to American products. Within the U.S., the recovery is still tepid, the International Monetary Fund said Tuesday.

The weak economy caused U.S. manufacturing activity to shrink in June for the first time since 2009, according to a report Monday from the Institute for Supply Management.

Still, the government's data on factory investment, along with increasing oil prices, helped push the stock market into positive territory in midday trading in New York. The Dow was up 0.36%, or 46 points, to 12,917.6.

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