Factory Orders See Unexpected Rise In June

Commerce Department says factory orders rose 0.4 percent an unexpected gain and latest sign manufacturing sector is recovering.

WASHINGTON (AP) -- Factory orders rose in June for the fourth time in five months, an unexpected gain and the latest sign of recovery in the ailing manufacturing sector.

The Commerce Department said Wednesday that factory orders rose 0.4 percent, after a 1.1 percent increase in May. Economists expected a 1 percent drop, according to a survey by Thomson Reuters.

A 2.7 percent rise in orders for nondurable goods, such as chemicals and textiles, was the most since June 2008 and drove the overall increase. Orders for petroleum and coal products jumped 13.2 percent, as the price of oil rose. Wholesale oil prices rose 18.5 percent in June, according to economists at JPMorgan Chase & Co.

Orders for durable goods, big-ticket items such as aircraft and appliances, fell 2.2 percent. Commercial aircraft orders, a volatile category, fell 38.6 percent after rising 60.4 percent in May.

Still, there were signs of strength in durable goods. Orders for cars and auto parts rose 1.5 percent, and orders also increased for iron and steel mills and construction machinery.

Orders for non-defense capital goods excluding aircraft, a key measure of business investment, rose 2.6 percent, the second consecutive increase.

Other recent news on manufacturing also has been positive. The Institute for Supply Management, a trade group, said Monday that manufacturing activity in July contracted at the slowest pace in almost a year.

The institute's index of manufacturing activity was 48.9, up from 44.8 in June. Readings below 50 indicate that economic activity contracted, but the survey's chair expects the figure will top that threshold next month for the first time since January 2008.

The auto industry is benefiting from the government's "cash for clunkers" program, which has spurred thousands of people to trade in older vehicles for new cars.

Ford Motor Co. said this week that its sales rose 2.4 percent in July from the same month last year, its first year-over-year increase since November 2007. Chrysler Group LLC posted a smaller year-over-year sales drop compared with recent months, helped by "clunkers" deals. GM's sales fell 19.4 percent, a slower pace than earlier this year.

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