Increased orders for steel and transportation equipment led a sharp rise last month in manufacturers' order books, the Commerce Department reported yesterday. Factory orders jumped by 4.8 percent in September after a slight decline in August, the report said.

A rise in manufacturers' shipments, or sales, and declining inventories also were noted in the report, which Commerce chief economist Courtenay Slater described as "quite encouraging" for its "signs of economic growth."

Meanwhile, the Federal Reserve announced that the nation's money supply dropped in the week ended Oct. 22 but not by enough to offset upward revisions to the previous week's growth.

The narrower measure of the money supply, M1-A, declined to a seasonally adjusted $387.2 billion, down $500 million from the previous week's figure. That, however, was revised up by $900 million from the preliminary total. M1-B was down by $400 million to $411.2 billion after an upward revision of $700 million to the Oct. 15 figure.

In the latest four weeks, M1-B was up by 16.3 percent at an annual rate from three months earlier, while M1-A rose by 13.8 percent, the Fed reported. These growth rates are well above the target ranges for the whole year, but there has been some room for faster growth in the second half of the year because of substantial declines in the money stock in the spring.

Durable goods orders jumped by 9 percent last month after falling by 1.5 percent in August. All categories except electrical machinery showed rises. Recent figures for new orders have been somehwat distorted by large swings in the value of aircraft industry orders. Last month these were up by $2.2 billion, or 69 percent, from August, when in turn they had fallen by 44 percent.

However, the Commerce Department said yesterday that "although new orders for this industry are volatile, the volume of orders for September is comparable to the average monthly volume of orders during 1979 of $5.5 billion."

The increase in orders was fairly widespread across industries, Slater said, although she added that 30 percent of the overall rise was accounted for by higher defense spending. "There was a good widespread increase in orders," she said.

Manufacturers' shipments were up by 3.4 percent in September -- the fourth consecutive monthly rise.They stood at $151.7 billion last month, still below the February high of $152.9 billion.

Demand for steel rose by $600 million, or 10.5 percent, in September to $6.2 billion.This was its highest volume this year. Weekly production figures for steel have shown a strong recovery in the industry in the last month, Slater said.

Inventories of durable goods were down slightly in money terms in September, which would represent a larger drop after adjusting for inflation.