By Bob Willis Aug. 5 (Bloomberg) -- Orders placed at U.S. factories in June rose for a third month in June as oil prices rose and demand increased for goods such as metals and construction. Bookings gained 0.4 percent after a revised 1.1 percent increase in May that was smaller than previously estimated, the Commerce Department said today in Washington. Excluding demand for transportation equipment such as cars and airplanes, which tends to be volatile, orders rose 2.3 percent. The factory slump is easing as leaner inventories, signs business investment may pick up and improving demand from overseas reinforce forecasts that the recession will end this year. A federal ``cash-for-clunkers'' program has started boosting demand for cars, helping the auto industry. At the same time, job losses will mean a slow, muted economic recovery. ``Manufacturers' customers are growing more comfortable with the level of their stockpiles, which sets the stage for an increase in orders and production,'' Ryan Sweet, a senior economist at Moody's Economy.com in West Chester, Pennsylvania, said before the report. Factory orders were forecast to fall 0.8 percent, after a previously reported 1.2 percent gain in the prior month, according to the median estimate of 62 economists surveyed by Bloomberg News. Estimates ranged from a decline of 2.1 percent to an increase of 1.6 percent. Orders for durable goods, which make up just over half of total factory demand, fell 2.2 percent, after a 1.3 percent increase the previous month. Civilian aircraft orders plunged 39 percent after gaining 60 percent the prior month. Bookings for motor vehicles and parts increased 1.5 percent after falling 4.7 percent. Sales of cars and light trucks fell to a 9.7 million annual rate in June from a 9.9 million annual rate the month before, according to Woodcliff Lake, New Jersey-based industry research firm Autodata Corp. In July, sales rose to an 11.3 million pace, the highest since September, Autodata reported this week. That compares with February's 9.1 million rate, which was the lowest since 1981. ``Perhaps the worst is behind us,'' Ford Motor Co. sales analyst George Pipas said in an interview with Bloomberg Television on Aug. 3. ``Consumers are feeling better than they did six to nine months ago.'' Orders for construction machinery increased 11 percent after rising 10 percent the month before. Orders for electrical equipment, appliances and components rose 1.3 percent, while orders for primary metals rose 9 percent. Bookings for capital goods excluding aircraft and military equipment, a measure of future business investment, rose 2.6 percent after a 4.3 percent gain. Shipments of those goods, used to calculate gross domestic product, increased 0.7 percent after falling 0.4 percent the month before. Orders for non-durable goods including food, petroleum and chemicals rose 2.7 percent in June after a 0.9 percent increase a month earlier. Bookings for petroleum and coal products rose 13 percent after gaining 10 percent. A barrel of crude oil on the New York Mercantile Exchange rose to an average $69.70 in June from $59.21 the prior month. Factory inventories fell 0.8 percent in June, the same as the prior month, and manufacturers had enough goods on hand to last 1.42 months at the current sales pace, down from 1.45 months, Commerce said today. The Institute for Supply Management's factory gauge rose to an 11-month high of 48.9 in July, while remaining below the breakeven point of 50, the Tempe, Arizona, group said on Aug. 3. Readings for new orders and production jumped to the highest level in more than two years, while a measure of exports showed the first expansion in overseas demand since September. A record-breaking drawdown of inventory is setting the stage for future growth. Stockpiles fell at a $141.1 billion annual rate in the second quarter, the most ever, Commerce said on July 31. Commerce also said the economy shrank at 1 percent pace in the second quarter, less than estimated, after a 6.4 percent contraction from January to March. Economists at JPMorgan Chase & Co. and Deutsche Bank Securities Inc. were among those raising forecasts for U.S. growth after last week's GDP report. Gross domestic product will expand at a 3 percent annual rate this quarter, the best performance in two years, said Bruce Kasman, chief economist at JPMorgan in New York. That's up from his prior estimate of 2.5 percent. Deutsche Bank Chief U.S. Economist Joseph LaVorgna lifted his average growth estimate for the second half of 2009 to 2.25 percent from 0.5 percent. Nonetheless, some companies remain wary. Nucor Corp., the second-largest U.S.-based steel producer, on July 23 reported its second-ever loss as the global recession cut demand for the industrial metal. ``The uncertainty in our economy is still very high,'' Nucor said in a statement. ``We are concerned that the marginal uptick in orders is not representative of an increase in `real' demand but more a result of both inventory adjustments and concern over rising prices.'' To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net

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