New orders for U.S.-made durable goods rose a larger-than-expected 1.3 percent in December and the previous month was revised higher, while non-transportation orders gained 0.9 percent, government data showed on Thursday.

Economists had forecast new orders for expensive items built to last three years or more to rise a smaller 1.0 percent. The gain in orders outside transportation matched Wall Street expectations.

November orders were revised up to show a 5.4 increase, the largest monthly gain since May 2005, from a previously reported 4.4 percent advance.

For 2005 as a whole, orders increased 8.2 percent, slightly below 2004's 10.0 percent gain. The annual increase in non-transportation goods orders was also 8.2 percent.

December's rise in orders was held back somewhat by an 8.1 percent drop in demand for civilian aircraft and parts. Analysts had expected some pullback after a soaring 139.3 percent gain in November, while surveys had predicted strong manufacturing demand outside of the transportation sector.

New orders for motor vehicles and parts rose 6.6 percent, the largest gain since August 2004, while defense aircraft and parts orders climbed 30.8 percent. Defense capital goods orders dipped 0.2 percent.

Machinery orders advanced 6.5 percent while communications equipment orders fell 3.3 percent.

Non-defense capital goods orders excluding aircraft, seen as a proxy for business spending, were up 3.5 percent, the strongest monthly gain since August 2005.

In a potential harbinger of stronger factory production to come, unfilled orders rose 2.4 percent to $637.3 billion.