Factory Orders Up 2.1% in May, Exports Cited

Orders to factories for manufactured goods rebounded 2.1% in May, the government said today in another report indicating that the economy’s weak industrial sector may be bouncing back.

The Commerce Department said orders for both durable and non-durable goods totaled a seasonally adjusted $240.9 billion and regained their 2.1% loss in April.

The size of the May increase had been expected by many analysts. At the same time, the April decline was smaller than the 2.3% drop initially reported last month.

It was the third gain in orders since they dropped 5.5% in January, their steepest decline since a 7% decrease in December, 1974. All major categories advanced except non-durable orders, which were unchanged at $112.4 billion.

Factory orders are a key economic barometer of manufacturing industry plans for production. A decrease in orders could result in a slump in that sector and subsequent layoffs.

But much of the improvement has been attributed to exports. American consumers, on the other hand, have slowed their purchases, which had been a major driving orce during the 7 1/2 years of economic expansion.

And the construction industry remains stalled. Commerce reported on Monday that spending fell 0.4% in May for its second straight monthly decline.

Commerce said the increase in new factory orders was concentrated in durables--big-ticket items expected to last at least three years. They were up 4% to $128.6 billion and nearly regained their 4.1% decline in April.

Most of the increase was in transportation orders, up 10.1% to $35.5 billion. Automobiles accounted for most of the gain, although defense aircraft orders also were up.

Excluding transportation, orders rose 0.8%.