The U.S. Census Bureau factory orders report surprised to the upside on Tuesday, increasing by 1.1% in April to contribute to an annual gain of 3.8%. The prior month's factory orders index was revised to show an increase of 1.5% from the previously reported 1.4% gain.

Economists were expecting a loss of 0.1% in the month.

New orders excluding transportation improved by 2.6% in the month, new orders ex-defence rose 1.3% and new orders ex-computers rose 1.3%.



Durable goods excluding transportation were downwardly revised to a 2.4% increase from the preliminary 2.5% estimate in last week's durable goods report. This follows an upwardly revised gain of 1.8% in March. Annually, the index has moved up 3.0%.

Total orders for durable goods were revised to a 0.6% loss from a previously reported loss of 0.5% in the advance report. In the previous month, new orders fell by 0.2%.

Non-defence capital goods excluding aircraft were revised downwards to a gain of 4.0%, which was originally reported as a 4.2% gain in the durable goods report. This follows a loss of 1.0% in the previous month.

Inventories were flat for the month following a 0.9% rise in March, while shipments advanced 2.2% following a gain of 1.1% in March.

The inventories-to-shipments ratio moved down at 1.23 in April after a 1.27 reading in both February and March.

Factory orders - the full report on Manufacturers' Shipments, Inventories, and Orders - is similar to the durable goods report, but is larger in scope and includes data on non-durable goods, such as food, clothing and fuel.

By Patrick McGee and edited by Nancy Girgis