New orders received by American factories, a leading indicator of the nation's industrial strength, rose a strong 1.6 percent in October, the government reported.

Factory orders rose to a seasonally adjusted $226.21 billion in October after falling 1.9 percent in September, the Commerce Department said last week.The month's orders were 9.0 percent above their year-earlier level, with most of the increase coming from orders for military hardware, including ships and tanks, and civilian automobiles.

Manufacturing has been one of the economy's strongest sectors in the past year as exports have boomed, spurred by the dollar's fall since 1985.

Monthly factory orders have been fluctuating since last spring, largely due to wide swings in orders for big items such as aircraft, ships and fleets of cars.

Manufacturers have received more business as companies are investing in new equipment to increase their capacity. Many factories are operating at or near full capacity to get rid of order backlogs.

Excluding orders received by defense contractors, which tend to fluctuate widely each month, new orders rose 0.2 percent in October after falling 1.7 percent in September.

Defense capital goods orders rose 42.5 percent in October to $10.65 billion, after falling 7.0 percent in September.

Non-defense capital goods orders, a measure of business investment in new equipment, fell 3.0 percent to $33.81 billion in October, after falling 10.2 percent the prior month.

Orders for durable goods - expensive items ranging from toasters to tanks - rose 2.3 percent in October to $122.06 billion after a 2.8 percent drop in September.

Orders for non-durable goods, including clothing, paper, chemicals and a wide range of disposable items, rose 0.8 percent in October to $104.15 billion, after falling 0.8 percent in September.

Shipments of manufactured items rose 0.5 percent in the month, while order backlogs, which have been rising for over a year, increased by 0.8 percent.