WASHINGTON (Reuters) - New orders received by U.S. factories beat Wall Street expectations and rose 0.9 percent in September, while inventories continued to shrink, the Commerce Department said on Tuesday.

It was the fifth month out of six that orders rose, the department said. They dropped an unrevised 0.8 percent in August. Analysts polled by Reuters had expected orders to increase 0.8 percent.

Machinery, which makes up roughly 7 percent of factory orders, had the largest surge of 7.9 percent in its biggest increase since March 2008.

Inventories have now fallen for 13 months in a row, with factories paring their stocks by 1 percent in September. This is the longest streak of shrinking inventories since they fell 15 months in a row beginning in February 2001.

(Reporting by Lisa Lambert, Editing by Andrea Ricci)