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Durable goods orders rebound, led by cars and planes

New orders for products ranging from refrigerators to airplanes rose in May, bouncing back from two consecutive monthly decreases, government data showed Wednesday.

The Commerce Department reported that orders for goods meant to last more than three years increased 1.1 percent last month, after a revised 0.2 percent decrease in April. The rise in orders last month raises hopes that the recovery still has some strength left, but concerns remain that a slowing global economy will stifle orders in future months.

"It was better than expected, which is surprising to see since recent economic reports have been less positive. I'm still concerned we'll see a third summer of an economic deceleration. While this is an important number, news out of Europe is still dominating equity markets," said chief investment officer David Carter of Lenox Wealth Advisors.

Orders for transportation equipment, i.e. planes and automobiles, which have risen in three of the past four months, gained 2.7 percent in May.

Economists polled by Reuters had forecast orders for durable goods, rising 0.4 percent after previously being reported as being flat in April.

Excluding transportation, orders rose 0.4 percent after dropping 0.6 percent in April. Economists had forecast this category rising 0.7 percent.

Slower growth in China and a looming recession in the debt-crisis ridden eurozone have taken some of the shine off the domestic manufacturing sector, leaving the economy mired in a soft patch.

Regional surveys of factory activity have mostly shown a weakening in orders this month, a trend that is likely to be highlighted in a report on national manufacturing next week.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 1.6 percent after dropping 1.4 percent in April and snapping two straight months of declines.

Economists had expected this category to rise 1.7 percent after a previously reported 2.1 percent drop.

Shipments of non-defense capital goods orders excluding aircraft, used to calculate equipment and software spending in the gross domestic product report, rose 0.4 percent after declining 1.5 percent in April.

Last month, orders for civilian aircraft rose 4.9 percent and motor vehicles climbed 0.5 percent.

Boeing received eight orders for aircraft, according to the plane maker's website, up from four in April.

Outside transportation, details of the report were fairly mixed, with increases in machinery, electrical equipment and appliances and capital goods orders increasing. Demand for primary metals and computers fell.

Reuters contributed to this report.