New orders for long-lasting U.S. manufactured goods rose by a much stronger-than-expected 1.8 percent in May, Commerce Department data on Wednesday showed, providing further evidence that the battered U.S. economy was finding its feet.

Analysts polled by Reuters had forecast durable goods orders would decline 0.6 percent last month. May's increase, the third gain in 4 months, followed a revised 1.8 percent gain in April, previously reported as a 1.7 percent rise.

New orders excluding transportation advanced 1.1 percent last month, compared with a forecast for a 0.4 percent decline, buoyed in part by a 7.7 percent rise in new machinery orders. This was the largest percentage increase in that category since March 2008, the Commerce Department said.

Orders excluding defense were 1.4 percent higher, versus a Reuters' poll prediction for a 0.4 percent drop.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, jumped 4.8 percent in May, the largest gain since September 2004, when they were up 8.2 percent. May's sharp rise compared with analyst forecasts for a 0.6 percent drop, and followed a revised 2.9 percent fall in April.

In one area of particular weakness, orders for motor vehicles and parts dropped 8.1 percent in May, the sharpest fall since August.

The Commerce Department said shipments of durable goods fell 2.1 percent in May, after falling 0.5 percent the month before.

This was the 10th straight decline in shipments, and the longest streak of consecutive monthly decreases since records began in 1992, the Commerce Department said.

(Reporting by Alister Bull; editing by Neil Stempleman)