Reflecting a continued spike in orders for transportation equipment, the Commerce Department released a report on Tuesday showing an unexpected surge in new orders for U.S. manufactured durable goods in the month of May.
The Commerce Department said durable goods orders shot up by 1.7 percent in May after jumping by an upwardly revised 1.2 percent in April.
Economists had expected durable goods orders to slump by 1.0 percent compared to the 1.1 percent advance that had been reported for the previous month.
"The latest durable goods orders and shipments data fend off fears that a recession is just around the corner," said Oren Klachkin, Lead US Economist at Oxford Economics. "We continue to think that the economy will eventually fall into a recession, but it looks increasingly unlikely to begin in Q3."
He added, "The economic backdrop is set to become more discouraging for manufacturers as tighter lending standards and elevated interest rates weaken demand for goods."
The unexpected increase in durable goods orders came as orders for transportation equipment spiked by 3.9 percent in May after soaring by 4.8 percent in April.
Orders for non-defense aircraft and parts led the way higher, skyrocketing by 32.5 percent in May after tumbling by 2.0 percent in April.
Excluding the surge in orders for transportation equipment, durable goods orders climbed by 0.6 percent in May after falling by a revised 0.6 percent in April.
Ex-transportation orders were expected to edge down by 0.1 percent compared to the 0.2 percent dip that had been reported for the previous month.
Orders for electrical equipment, appliances and components surged by 1.7 percent, while orders for machinery jumped by 1.0 percent.
The report also said orders for non-defense capital goods excluding aircraft, a key indicator of business spending, increased by 0.7 percent in May after climbing by 0.6 percent in April
Shipments in the same category, which is the source data for equipment investment in GDP, inched up by 0.2 percent in May after rising by 0.4 percent in the previous month.
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