By Glenn Somerville

WASHINGTON (Reuters) - New orders at U.S. factories rose by a sharper-than-expected 1.1 percent in April as strong demand for quickly used nondurables offset a dip in orders for costly durable goods, the Commerce Department said on Tuesday.

The April pickup in overall factory orders followed an upwardly revised increase of 1.5 percent in March orders that previously was reported as a 1.3 percent gain.

The dollar extended gains against other major currencies after the factory orders data was released.

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Excluding transportation items, factory orders posted back-to-back 2.6 percent increases in each of March and April, implying the industrial sector still retains considerable vigor.

Shipments of finished goods rose 2.2 percent in April, the strongest monthly pickup since December 2006.

Orders for costly durable goods - items like cars and refrigerators intended to last three years or more - declined by a revised 0.6 percent in April rather than the 0.5 percent drop previously reported. That followed a 0.2 percent decrease in March.

But orders for nondurable goods, goods like paper products and food items, climbed by 2.8 percent in April, building on an even stronger 3.1 percent jump in March.

Wall Street economists surveyed by Reuters had forecast that total factory orders would decline by 0.1 percent in April and that durable goods orders would drop 0.5 percent.

Nondefense capital goods orders excluding aircraft, which some economists view as a proxy for business investment, climbed by a revised 4 percent in April, slightly less than the 4.2 percent gain previously reported, after contracting by 1 percent in March.

In another sign of potential strength, inventories were flat in April after building for several months in a row. That may leave more room for factories to keep producing to meet current demand.

Orders for primary metals and machinery picked up in April but transportation orders kept sliding, down 7.9 percent after falling 5.1 percent in March.

Earlier on Tuesday, General Motors Corp <GM.N> said it was cutting jobs and closing four North American truck plants because it now considered that higher gasoline prices will be permanent and will reduce demand for bigger vehicles.

(Reporting by Glenn Somerville, editing by Joanne Morrison)