New orders at US factories fell a smaller-than-forecast 0.5 percent in May, logging the first decline in four months, the Commerce Department said on Tuesday. Analysts polled by Reuters were expecting orders to slide 1.2 percent.
April orders were revised higher to show a 0.5 percent gain from the 0.3 percent rise first reported. The data contrasts with other reports pointing to strength in US manufacturing such as Monday's Institute for Supply Management report, which said manufacturing growth accelerated in June while price pressures eased.
US Treasury debt prices pared losses after a weaker-than-expected US May pending home sales released separately on Tuesday morning but slipped on the stronger-than-expected factory orders data.
Transportation equipment orders, the largest category of factory orders, fell 6.9 percent in May. Excluding transportation, factory orders rose 0.7 percent, helped by a 4.2 percent rise in computer and electronic product orders.
When defence orders were stripped out, factory orders slipped 0.6 percent.
May durable goods orders were revised to show a drop of 2.4 percent after the government's initial estimate last week of a decline of 2.8 percent. It was the first decline in durable goods orders since January.
Non-durable goods orders, nearly half of all factory orders, rose 1.6 percent in May. Non-defence capital goods orders excluding aircraft, a proxy for business spending were revised to a slide of 2.1 percent slide from drop of 3 percent.
The inventory-to-shipments ratio eased to 1.23 in May. Factory inventories have risen 14 out the last 15 months, and are at a record high.
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