June 25, 2014 8:40 AM, EDT
Orders for Capital Goods Rise in May
Ty Wright/Bloomberg News

Orders for U.S. business equipment climbed in May, showing corporate investment is helping revive the economy after a slump at the start of the year.

Bookings for non-military capital goods excluding aircraft rose 0.7% after a 1.1% drop in April, data from the Commerce Department showed.

 Demand for all durable goods -- items meant to last at least three years -- decreased 1%, reflecting declines in the volatile transportation and defense categories.

Companies are expanding capacity as the world’s largest economy bounces back from a first-quarter contraction that was the worst since the recession five years ago. Stronger orders for cars and homes will probably help keep manufacturers busy, giving growth a boost in the second half of the year.

“When you look at business fixed investment, the trend is improving,” Mark Vitner, senior economist at Wells Fargo Securities LLC, said before the report. “The auto sector is chugging along.”

The May figures for overall durable goods included a 4% decrease in demand for commercial aircraft and a 31.4% slump in orders for military capital equipment, according to the Commerce Department’s report.

Factories are being helped by further gains in auto demand. Cars and light trucks sold at a 16.7 million pace in May, the fastest rate since February 2007. The durable goods report showed a 2.1 % increase in orders for motor vehicles and parts.