(Reuters) - New orders for factory goods rose solidly in November, but business spending on capital is cooling, a government report showed on Wednesday.

The Commerce Department said orders for manufactured goods increased 1.8 percent, snapping two consecutive months of declines, as demand for transportation equipment surged.

It was the largest rise since July.

October's orders were revised to show a much smaller 0.2 percent fall, which was initially reported as a 0.4 percent drop. Economists had expected orders to increase 1.7 percent in November.

Orders excluding transportation rose 0.3 percent in November after advancing 0.4 percent the prior month.

Orders for non-defense capital goods excluding aircraft - seen as a measure of business confidence and spending plans - fell 1.2 percent after declining 0.9 percent in October.

The closely tracked shipments for this category fell 0.8 percent after dropping 0.9 percent in October, indicating businesses' appetite for capital spending may be waning. November marked the third straight month of declines.

Business spending had risen sharply since the end of the 2007-09 recession and was one of the drivers of the recovery from the longest downturn since the 1930s.

Unfilled orders of non-defense capital goods rose 0.9 percent after increasing 1.0 percent in October.

Data on Tuesday showed manufacturing activity grew at its fastest pace in six months in December, indicating underlying strength in the sector. But slowing global growth could take some edge of U.S. factories this year.

The Commerce Department report showed orders for transportation equipment jumped 14.7 percent in November as demand for civilian aircraft soared 73.9 percent.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

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