WASHINGTON- New orders for U.S.-made goods rebounded in May, suggesting a turnaround in manufacturing, though business spending will likely contract again in the second quarter amid cheaper crude oil as the COVID-19 pandemic depressed global growth.

The Commerce Department said on Thursday factory orders increased 8.0% after falling 13.5% in April. Economists polled by Reuters had forecast factory orders increasing 8.9% in May.

Factory orders dropped 10.3% year-on-year in May. Manufacturing, which accounts for 11% of U.S. economic activity, appears to be regaining its footing, but a resurgence in coronavirus cases amid the reopening of businesses threatens the budding recovery.

The Institute for Supply Management reported on Wednesday that its measure of national factory activity jumped to a 14-month high in June.

Unfilled orders at factories nudged up 0.1% in May after falling 1.5% in April. Inventories at factories rose 0.2%, while shipments of manufactured goods increased 3.1%.

Transportation equipment orders soared 82.0% in May after tumbling 48.9% in the prior month. Orders for motor vehicles and parts gained 28.3%. Machinery orders rose 0.5%. Orders for electrical equipment, appliances and components increased 1.0%.

The government also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, rose 1.6% in May instead of increasing 2.3% as reported last month.

Shipments of core capital goods, which are used to calculate business equipment spending in the GDP report, increased 1.5% in May, instead of rising 1.8% as previously reported. Economists expect business spending to contract in the second quarter, the fifth straight quarterly decline.

The Atlanta Federal Reserve is forecasting gross domestic product plunging at a record 36.8% annualized rate in the April-June quarter. The economy contracted at a 5.0% rate in the first quarter, the sharpest decline since the 2007-09 recession.

(Reporting By Lucia Mutikani Editing by Chizu Nomiyama) ((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters Messaging: lucia.mutikani.thomsonreuters.com@reuters.net))