Factory Orders Rise 0.4%, Better Than Expected

American manufacturers saw demand for their products rise modestly in May, raising hope that this battered sector of the economy may be emerging from a rough patch.

New orders placed with U.S. factories totaled $320.6 billion in May, representing a 0.4% increase from April’s level, the Commerce Department reported Wednesday.

The increase comes after orders fell by a sharp 3% in April from March, the steepest decline since November 2001.

“There is a glimmer of hope that manufacturing is beginning a return to a growth track,” said Ken Mayland, ClearView Economics president.

May’s performance was stronger than economists’ flat forecast. Even so, though happy with the improvement in factory orders in May, Mayland and other economists said there is still reason for caution.

Manufacturing has been hard hit by the uneven economic recovery. Businesses have been reluctant to crank up capital spending and to go on a hiring spree, two crucial ingredients to a sustained turnaround for the national economy.

The 0.4% increase in factory orders was helped by stronger demand for nondurable goods, including apparel, food and plastic products. In that broad category, factory orders rose 1.2% in May, a turnaround from April’s 3.7% decline.

Also helping out was a 0.8% increase in May for new orders for furniture and related products, following a 3% rise in April.

However, orders for household appliances, computers and cars all fell in May.