US factory orders rebound in May on strong aircraft demand

WASHINGTON (Reuters) -New orders for U.S.-manufactured goods surged in May on strong demand for aircraft and business spending on equipment appeared to be strong halfway through the second quarter.

Factory orders increased 8.2% after a downwardly revised 3.9% drop in April, the Commerce Department's Census Bureau said on Thursday. Economists polled by Reuters had forecast factory orders rebounding 8.2% after a previously reported 3.7% decline in April. They increased 3.2% on a year-on-year basis in May.

Manufacturing, which accounts for 10.2% of the economy, remains constrained by President Donald Trump's aggressive tariffs on imported goods. An Institute for Supply Management survey on Tuesday showed anxiety over trade policy among manufacturers in June, with manufacturers variously describing the business environment as "hellacious" and "too volatile" for long-term procurement decisions.

Trump sees the tariffs as a tool to raise revenue to offset his promised tax cuts and to revive a long-declining industrial base, a feat that economists argued was impossible in the short term because of labor shortages and other structural issues.

Commercial aircraft orders soared 230.8%. That reflected at least 150 aircraft from Qatar Airways placed with Boeing during Trump's visit to the Gulf Arab country in May.

Orders for motor vehicles, parts and trailers rose 0.8%. Orders for computers and electronic products increased 1.5%, while those for electrical equipment, appliances and components rose 0.7%. Machinery orders gained 0.4%.

The government also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, rebounded 1.7% in May as estimated last month.

Shipments of these so-called core capital goods rose 0.4%, revised down from the 0.5% reported last month. Non-defense capital goods orders jumped 49.5%. They were previously reported to have accelerated 49.4%. Shipments of these goods dipped 0.1% instead of being unchanged as previously reported.

(Reporting by Lucia Mutikani)

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