Factory orders fell slightly because reduced demand for aircraft and defense goods offset moderate gains in other sectors, the Commerce Department reported. The April decline followed a revised 1.7% increase in March, previously reported as a 1.5% gain.

Analysts had predicted a greater decline in April after the Commerce Department announced last week that durable-goods orders, such as for major appliances and automobiles, fell 1.9% in April. But orders for nondurable goods rose 2% for the month, offsetting that result.

The downturn in durable-goods orders mostly reflects erratic month-to-month demand for civilian aircraft. Although auto sales rebounded in April following the General Motors Corp. auto-parts strike, overall orders for transportation goods dropped 12.8% after a 14.6% increase in March.

Excluding that sector, new orders for other items rose 1.9% in April. Those gains indicate a slowly rebounding manufacturing sector, said Robert Dederick, chief economist at Northern Trust Co. "The manufacturing sector has been the drag on the economy," he said. "That stage is really behind us."

Factory inventories were unchanged, and unfilled orders fell 0.2%. The completion of several months of inventory correction indicates continued short-term growth, analysts said.

"This picture is very, very consistent with an economy that was depressed by an inventory adjustment and is working its way out of it," said James Annable, the chief economist at First National Bank of Chicago. "But it will continue to be hampered into the second half of the year."

The industrial sector will continue to produce erratic results but is experiencing a general pickup in activity, said Richard D. Rippe, senior vice president and chief economist at Prudential Securities.

"Business is gradually improving," he said. "It’s not a picture of sharp or robust growth."