US factory orders increase in May

The US manufacturing sector may be recovering

The number of new orders received by US factories rose in April, according to the Commerce Department, but March's figure was revised downwards.

The figure rose 0.7% in April, which looked even better after March's fall had been increased from 0.9% to 1.9%.

April's increase was smaller than had been expected, but still suggests US manufacturing may be recovering.

One of the big increases was in car sales, which were boosted by hefty discounting by car dealerships.

General Motors and Chrysler both cut back on their dealerships as part of plans linked to their bankruptcy filings, leaving the dealers desperately trying to sell their stock.

Also on Thursday, figures from the Institute for Supply Management showed that the service sector had shrunk at the slowest rate since October.

Its services index rose to 44 in May from 43.7 in April, which was a smaller rise than had been expected.

Any figure below 50 indicates that the sector is contracting.

On Tuesday, the ISM released its index of factory activity, which rose to 42.8 in May from 40.1 in April.