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US factory orders slide 0.5 per cent in May, ending 3 months of gains

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. The Commerce Department releases factory orders for May on Wednesday, July 2, 2014. (AP Photo/Paul Sancya)

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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. The Commerce Department releases factory orders for May on Wednesday, July 2, 2014. (AP Photo/Paul Sancya)

WASHINGTON - Orders to U.S. factories fell in May, ending three months of gains.

The Commerce Department reported that orders fell 0.5 per cent, pulled down by falling demand for military and transportation equipment. That followed increases of 0.8 per cent in April, 1.5 per cent in March and 1.7 per cent in February.

Excluding military hardware, factory orders rose 0.2 per cent in May from April. Orders for transportation equipment fell 2.9 per cent. Orders for computers and electronic equipment fell 2 per cent, biggest monthly drop since December.

Orders for durable goods, meant to last three years or more, fell 0.9 per cent in May. Orders for nondurable goods slipped 0.2 per cent.

Factory orders were up 2.5 per cent from May 2013.

U.S. factories have been busy. The Institute for Supply Management reported Tuesday that manufacturing expanded in June for the 13th straight month, though the pace of growth slowed from May.

A measure of employment showed that factories added jobs for the 12th straight month; the pace of hiring last month was the same as in May.

Manufacturers added 10,000 jobs in May as overall U.S. employers created more than 200,000 jobs for the fourth straight month, longest such stretch since 1999. The government's employment report for June comes out Thursday.

The U.S. economy shrank at a 2.9 per cent annual rate from January through March. But economists blame the first-quarter drop on an unusually bitter winter and a sharp reduction in businesses' inventories. They expect economic growth to rebound to an annual pace of 3 per cent or more the rest of the year, boosted by rising consumer demand and a rebound in U.S. export sales.

Economists have been worried about the fallout from slower economic growth in China. But a survey out Tuesday showed that Chinese manufacturing grew in June for the first time in six months, though the expansion was weak. HSBC Corp. said Tuesday its purchasing managers index for China rose to 50.7 from May's 49.4 on a 100-point scale. Numbers above 50 signal growth.

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