The department said transportation and military equipment improved December's numbers. Analysts said the report adds to signs that the worst of the recession may be history.
The latest increase was roughly in line with the 1.1% gain forecast by economists in a Reuters poll and was the second increase in the last three months.
Despite the latest gain, factory orders for 2001 were well below levels seen in the previous year. Orders fell 8.5% in 2001 on a year-over-year basis, the largest decline on record since comparable records began in 1992.