Factory Orders Rise 0.4% in May

Orders placed with U.S. factories rose 0.4% in May, led by stronger demand for industrial machinery and petroleum products, the Commerce Department said Wednesday.

This was the second increase in the past three months and followed a revised 3% decline in April, the largest drop since November 2001. Excluding transportation, orders jumped 0.8%, the fourth increase in six months.

Improving factory orders translate to increased demand for trucking services because factories depend on trucks to deliver raw materials and carry finished products to stores and warehouses.

Economists had expected the report to show factory orders unchanged, Bloomberg reported. Analysts told Bloomberg that factory bookings appear to be rebounding in the aftermath of the Iraq war as consumers step up spending amid tax cuts, energy prices fall, stocks rise and interest rates remain low.

Factory inventories were down 0.1% in May for the second straight month, Commerce said.

With shipments increasing, the inventory-to-shipments ratio, a gauge of how long goods sit at factories, declined to 1.34 months from 1.35 in April.

Wednesday’s report showed orders for non-durable goods, which include clothing and chemicals, rose 1.2% in May after dropping a revised 3.7%.

The value of shipments of petroleum and coal products rose 9.3% after a 19.4% drop the month before.

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