09/25/2013 08:33 EDT | Updated 11/25/2013 05:12 EST

Orders for long-lasting US factory goods tick up 0.1 pct. in August on higher auto demand

WASHINGTON - Companies placed slightly more orders in August for U.S. long-lasting manufactured goods, stepping up demand for cars, trucks, machinery and metal products. The increase points to modest growth in manufacturing output.

Orders for durable goods, items expected to last at least three years, increased 0.1 per cent in August, the Commerce Department said Wednesday. That comes after orders plummeted 8.1 per cent in July, which was largely because of a steep drop in volatile commercial aircraft orders.

The August orders were held back by a decline in demand for defence aircraft and other military goods. That could be related to steep government spending cuts that took effect in March. Excluding defence spending, orders rose 0.5 per cent.

Auto factories reported a 2.4 per cent increase in orders, the biggest in six months.

And orders for so-called core capital goods rose 1.5 per cent, after falling 3.3 per cent the previous month. Core capital goods are a good measure of businesses' confidence in the economy and include items that point to expansion, such as machinery and computers.

Durable goods shipments rose 0.9 per cent in August, after two months of declines. The shipments figures are used to calculate economic growth.

Manufacturers are trying to rebound from a slump earlier this year, when weak growth overseas lowered demand for U.S. goods. Companies also spent less on large equipment. There have been signs that that factory production is picking up.

Factories ramped up their output in August by the most in eight years, driven by a robust month at auto manufacturers. That suggested manufacturing could help drive growth in the second half of the year.

And a survey of purchasing managers found that factories expanded in August at their fastest pace in more than two years, driven by a jump in new orders.

The economy expanded at a 2.5 per cent annual pace in the April-June quarter, up from 1.1 per cent annual rate from January through March. Many economists expect growth is slowing in the July-September quarter to an annual rate of 2 per cent pace or below.