Factory Orders Rebound in May, Exceed Forecasts

Orders to factories registered their largest increase in nearly a year, boosted by stronger demand for cars, semiconductors and industrial machinery, the government said Tuesday.

Factory orders rebounded in May, rising 2.5%, after falling by 3.4% the month before, the Commerce Department said.

The latest snapshot of manufacturing activity was better than many analysts were expecting. They had forecast that factory orders would rise by 1.5% in May. The advance was the largest since a 7.5% gain posted in June 2000.

“This rise in orders is quite encouraging and points to a fragile but emerging recovery,” said Jerry Jasinowski, president of the National Assn. of Manufacturers.

Manufacturers have been hardest hit by the economic slowdown which began last year. To cope with flagging demand, firms have cut back production and laid off workers.

But recent reports have offered signs that the economy and the climate for manufacturers may be improving.

The National Assn. of Purchasing Management on Monday said its key gauge of industrial activity rose in June, turning in its best performance in seven months.

In the Commerce Department report, orders for transportation products registered the biggest increase, rising 3.5%, following a drop of 9.4% in April. Much of the gain came from stronger demand for automobiles and car parts, the government said.

Excluding the often-volatile transportation sector, factory orders jumped by 2.3% in May.

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Factory Orders

New orders, in billions of dollars, seasonally adjusted:

*

May: $343.7 billion

Source: Commerce Department