WASHINGTON (Reuters)- New orders for U.S. factory goods rose more than expected in May, a hopeful sign for U.S. manufacturers who have appeared more vulnerable to Europe's festering debt crisis.

The Commerce Department said on Tuesday new orders for manufactured goods rose 0.7 percent during the month.

Economists had forecast orders rising 0.2 percent.

The report showed broad gains across industries making everything from machinery and appliances to cars and planes.

Still, the trend in U.S. manufacturing has appeared softer and has added to concerns the economic recovery is losing steam.

New factory orders have declined in three of the five months through May, and the government on Tuesday revised its estimate for April to show a slightly sharper 0.7 percent drop.

On Monday, the private Institute for Supply Management said activity in the manufacturing sector contracted in June for the first time in nearly three years.

America's factories have been a major ingredient of the country's recovery from the 2007-2009 recession.

The Commerce Department report showed new orders outside transportation rose 0.4 percent, with machinery up 4.2 percent and orders for household appliances up 2.0 percent.

Orders for non-defense capital goods excluding aircraft - seen as a measure of business confidence and spending plans - increased 2.1 percent in May.

(Reporting by Jason Lange; Editing by Andrea Ricci)