U.S. Factory Orders Drop 0.5% In May, More Than Expected

(RTTNews) - New orders for U.S. manufactured goods fell by more than expected in the month of May, according to a report released by the Commerce Department on Wednesday.

The report said factory orders fell by 0.5 percent in May after climbing by an upwardly revised 0.8 percent in April.

Economists had expected orders to dip by about 0.3 percent compared to the 0.7 percent increase that had been reported for the previous month.

The bigger than expected drop in factory orders was partly due to a sharp pullback in orders for transportation equipment, which fell by 2.9 percent in May after jumping by 1.8 percent in April.

Excluding the steep drop in orders for transportation equipment, factory orders fell by just 0.1 percent in May compared to a 0.6 percent increase in April.

Meanwhile, the report showed that factory orders actually rose by 0.2 percent in May when excluding a drop in orders for defense.

The Commerce Department also said orders for durable goods fell by a revised 0.9 percent in May compared to the 1.0 percent drop that was reported last week. Orders for non-durable goods dipped 0.2 percent.

Additionally, the report said shipment of manufactured goods edged up by 0.1 percent in April, while inventories of manufactured goods rose by 0.8 percent.

With inventories rising at a faster pace than shipments, the inventories-to-shipments ratio ticked up to 1.31 in May from 1.30 in April.