June 25, 2014 at 8:56 am

Orders for U.S. durable goods drop 1% in May

Robert and Sarah Reynolds, left, check out a new Tesla all electric car with Tesla representatives John Van Cleave and Raven Rivera, right, at a Tesla showroom inside the Kenwood Towne Centre in Cincinnat in March 2014. The Commerce Department releases durable goods for May on June 25, 2014. (Al Behrman / AP)

Washington Orders for U.S. durable goods tumbled 1 percent in May as demand for military equipment fell sharply. But excluding defense-related goods, orders actually rose, and orders in a key category that signals business investment also increased.

The gains outside of military goods suggest business spending is picking up, which could give the economy a much-needed boost.

The Commerce Department says orders, excluding defense, rose 0.6 percent in May, after falling 0.8 percent in April. Orders in core capital goods, which reflect business investment, increased 0.7 percent, after a 1.1 percent drop.

Factories reported higher demand for steel and other metals, computers, and autos.

The figures come as a separate report showed that the U.S. economy contracted sharply in the first three months of the year, mostly because of bad weather.