Washington: New orders for US-made goods increased for a second straight month in January, suggesting the recovery of the manufacturing sector was gaining momentum as rising prices for commodities spur demand for machinery.

Factory goods orders rose 1.2 per cent, the Commerce Department said on Monday after an unrevised 1.3 per cent jump in December. Economists polled by Reuters had forecast factory orders advancing 1.0 per cent in January.

Factory orders were up 5.5 per cent from a year ago. Total shipments of manufactured goods increased 0.2 per cent after surging 2.5 per cent in December.

Manufacturing, which accounts for about 12 per cent of the US economy, is regaining its footing after being buffeted by lower oil prices, a strong dollar and an inventory overhang.

The nascent recovery was underscored by a survey last week showing a gauge of national factory activity jumped to a 2-1/2-year high in February.

Manufacturing could be boosted by the Trump administration’s proposed tax reform, which would include corporate tax cuts.

Promises of a lower corporate tax bill have buoyed business confidence in the last few months, but are yet to translate into strong business investment on capital goods.

The Commerce Department also said orders for non-defence capital goods excluding aircraft — seen as a measure of business confidence and spending plans — slipped 0.1 per cent in January instead of the 0.4 per cent drop reported last month.

Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, fell 0.4 per cent in January. They were previously reported to have declined 0.6 per cent.

The weakness in shipments points to continued sluggish growth in business spending on equipment, which increased at a 1.9 per cent annualised rate in the fourth quarter. That was the first rise in over a year.

US stocks and the dollar were trading lower in mid-morning trading. Prices of US Treasuries also fell.

In January, orders for transportation equipment accelerated 6.2 per cent, reflecting a 62.2 per cent surge in defence aircraft orders. There was also a 69.8 per cent jump in orders for civilian aircraft. Outside transportation, orders for machinery increased 0.9 per cent.

Orders for computers and electronic products fell 1.9 per cent and bookings for electrical equipment, appliances and components declined 2.6 per cent. Orders for fabricated metal product rose 2.3 per cent.

Unfilled orders at factories fell 0.4 per cent after declining 0.8 per cent in December. Unfilled core capital goods orders increased 0.4 per cent in January after a similar gain in the prior month.

Inventories of goods at factories rose 0.2 per cent in January. They have increased in six of the last seven months.

The inventories-to-shipments ratio was 1.31 in January, unchanged from December.