A fall in demand for military equipment spurred a drop in new orders for U.S. factory goods in May, but signs of a healthy appetite for investment in the private sector pointed to broader strength in the economy.
The Commerce Department said on Wednesday new orders for manufactured goods decreased 0.5 percent. That was a steeper drop than the 0.3 percent decline forecasted by analysts.
Stripping out military wares, new orders rose a modest 0.2 percent.
U.S. factory output appeared to accelerate in the second quarter after lackluster activity during an unusually harsh winter. Data on Tuesday pointed to U.S. manufacturing activity rising at a steady clip in June, while automobile sales raced to their highest level in almost eight years.