New orders for U.S. manufactured capital goods rose for a second straight month in July as demand for machinery and a range of other products picked up, offering a tentative sign that a business spending downturn was starting to ease.

The Commerce Department said on Thursday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 1.6 percent last month.

That was the largest gain since January and followed an upwardly revised 0.5 percent rise in June. These so-called core capital goods orders were previously reported to have gained 0.4 percent in June.

That was the first back-to-back increase since January 2015. Economists polled by Reuters had forecast core capital goods orders rising only 0.3 percent last month.

Business spending has contracted since the fourth quarter of 2015, in part as companies slashed capital spending budgets in response to lower oil prices.