Factory orders rose to a three-month high in June, fueling hopes for a rejuvenation in the nation's manufacturing sector.

New orders for manufactured goods jumped 1.7%, or $5.5 billion, to $326 billion in June, the Commerce Department reported Monday. Orders climbed 0.3% in May. Economists predicted a rise of 1.5% in June.

Orders for durable goods, like those for cars and major appliances, increased by a revised 2.6%, the largest gain since July 2002. Orders for nondurable goods were up 0.7%.

Orders for transportation equipment, such as motor vehicles and aircraft, climbed 4.7%. Excluding transportation, factory orders advanced 1.2%. Orders for defense goods increased 16.7%. Excluding defense, new orders would have risen 1.5%. Consumer goods orders were up 1%.

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Shipments rose 1.1%, after a 0.3% increase in May. Unfilled orders climbed 0.3%, while factory inventories declined 0.2%.

The factory orders report follows last week's mixed news on the progress of the U.S. industrial sector. The Institute for Supply Management said its purchasing managers' survey showed expansion in the manufacturing sector in July for the first time in five months, but the Labor Department said that factories shed 71,000 jobs that month.