Nov. 3 (Bloomberg) -- Orders placed with U.S. factories rose in September for the fifth time in six months, reinforcing signs that manufacturing will drive the economic recovery.

Bookings increased 0.9 percent, exceeding the median forecast of economists surveyed by Bloomberg News, after dropping 0.8 percent in August, figures from the Commerce Department showed today in Washington. Excluding demand for transportation equipment which tends to be volatile, orders climbed 0.8 percent after a 0.3 percent August gain.

A record plunge in stockpiles and a boost to exports, in part from more than $2 trillion in global stimulus, means companies will ramp up production. The acceleration in manufacturing will help the economy grow this quarter, building on the expansion that began in the previous three months.

“Manufacturing is in recovery,” said David Sloan, a senior economist at 4Cast Inc. in New York, who correctly estimated the gain in orders. “There’s a need to rebuild inventories and exports are getting stronger. The economy does seem to be in a sustainable recovery now.”

Factory orders were forecast to rise 0.8 percent, according to the median forecast of 66 economists surveyed by Bloomberg News. Projections ranged from no change to a 1.5 percent gain.

Stocks advanced. The Standard & Poor’s 500 Index closed up 0.2 percent at 1,045.41 in New York.

Durable Goods

Orders for durable goods, which make up just over half of total factory demand, increased 1.4 percent after a 2.7 percent drop the previous month. Bookings for non-durable goods, including food, petroleum and chemicals, rose 0.6 percent.

The increase in demand for long-lasting goods was propelled by a 7.9 percent surge in bookings for machinery, the biggest gain since March 2008. Bookings for vehicles and parts climbed 0.6 percent.

Ford Motor Co., the only major U.S. automaker to avoid bankruptcy, yesterday posted its first operating profit since early 2008 on smaller discounts and higher sales. Dearborn, Michigan-based Ford said it expects to be “solidly profitable” in 2011. Chief Executive Officer Alan Mulally said he is taking a “cautiously optimistic point of view” on 2010.

Investment Signal

Bookings for capital goods excluding aircraft and military equipment, a measure of future business investment, increased 1.8 percent after a 1 percent drop. Shipments of those goods, used to calculate gross domestic product, fell 0.2 percent after decreasing 2.2 percent.

The pickup in demand for capital goods signals business investment will probably strengthen this quarter and next, helping to sustain growth. The economy expanded at a 3.5 percent pace in the third quarter after a yearlong contraction as government incentives spurred consumers to spend more, according to Commerce Department data released last week.

Consumer spending, which accounts for about 70 percent of the economy, climbed by the most in two years, while inventories continued to drop following a record decrease in the second quarter, the data showed. Investments in new equipment rose at a 1.1 percent annual pace, the first gain since the end of 2007.

Today’s report showed factory inventories decreased 1 percent, and manufacturers had enough goods on hand to last 1.36 months at the current sales pace, the fewest since October 2008.

Production Gain

Lean stockpiles is one reason factories are gaining momentum. A report yesterday from the Institute for Supply Management showed manufacturing last month expanded at the fastest pace in more than three years as production surged.

Companies seeing steadier demand include Texas Instruments Inc., the second-largest U.S. chipmaker. The Dallas-based company on Oct. 19 forecast fourth-quarter profit and sales that beat the average estimate of analysts surveyed by Bloomberg.

The next day, Peoria, Illinois-based Caterpillar Inc., world’s largest maker of bulldozers and excavators, issued a full-year profit forecast exceeding the highest prediction from analysts.

“We’ve already started planning for an upturn,” Chief Executive Officer Jim Owens said in a statement on Oct. 20.

To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net

Last Updated: November 3, 2009 16:44 EST