Factory orders increased in June

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New orders for manufactured goods increased 0.4 percent the U.S. Census Bureau reported Wednesday in a preliminary report on the manufacturing industry in June, following a 1.1 percent increase in May.

Factory orders were expected to fall 0.8 percent, according to a survey of economists by Bloomburg L.P. Excluding volatile demand for transportation equipment, orders rose 2.3 percent in the month.

Manufacturing is seeing some inventory reductions, which means businesses may eventually start ramping up production to keep up with demand as the economy shifts into recovery mode. In the same vein, the federal “cash-for-clunkers” program has boosted the perceived demand for cars, though its overall economic impact is uncertain.

Economist Ryan Sweet, with Moody’s Economy.com, told Bloomberg:

Manufacturers’ customers are growing more comfortable with the level of their stockpiles, which sets the stage for an increase in orders and production.

The June increase in factory orders means new orders have now been up four of the last five months. However, new orders for manufactured durable goods in June fell 2.2 percent after two consecutive monthly increases.

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