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In this March 14, 2014 photo, an assembly line worker builds a 2015 Chrysler 200 automobile at the Sterling Heights Assembly Plant in Sterling Heights, Mich. (Paul Sancya/AP)
In this March 14, 2014 photo, an assembly line worker builds a 2015 Chrysler 200 automobile at the Sterling Heights Assembly Plant in Sterling Heights, Mich. (Paul Sancya/AP)

U.S. factory orders hurt by defence; investment appetite positive Add to ...

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 per cent. That was a steeper drop than the 0.3 per cent decline forecasted by analysts.

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Stripping out military wares, new orders rose a modest 0.2 per cent.

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.

Wednesday’s data reinforced the view that investment demand could support a sustained pickup in economic growth this year.

The Commerce Department left unchanged its previous estimate for a proxy for business investment demand, with new orders for non-military capital goods other than aircraft rising 0.7 per cent in May.

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