Durable-Goods Orders Decline
The government reported surprisingly bleak economic news Wednesday as drops in durable-goods orders and new-home sales cast a cloud across upbeat expansion prospects.
New orders for long-lasting U.S. manufactured goods fell at the steepest rate in more than a year across a broad spectrum of categories, the Commerce Department said.
In another report, the department said purchases of new single-family homes fell 2.4% to a seasonally adjusted 1.082-million-unit annual rate last month. Analysts hoped for an increase in sales to a 1.120-million pace.
Analysts said that while the reports were a reminder that the economy still was on the mend from a mild recession in 2001, they did not imply it was at risk of a relapse, only that the recovery remained modestly paced.
“These were ugly numbers, but they also jump around a lot,” said economist Joel Naroff of Naroff Economic Advisors in Holland, Pa., referring to the durables data. There were back-to-back orders gains in September and October and order backlogs remained healthy, Naroff noted.
The Commerce Department said durable goods orders fell 3.1% to a seasonally adjusted $180.07 billion, defying Wall Street economists’ expectations for a 0.8% rise.
It was the biggest decline since a 6% tumble in September 2002 and followed a revised 4% increase in October orders.
Every category of durable goods -- those intended to last three years or more -- fell in November, with orders falling for items including computers, aircraft, new cars and defense goods. The biggest single decline came in orders for computers and electronic products, which fell 10.8% to $30.09 billion after rising 2.6% in October.
The category that the Commerce Department calls nondefense capital goods excluding aircraft orders, taken as a proxy for business spending plans, fell 5.9% to a seasonally adjusted $55.59 billion. The decline was the segment’s biggest in more than 1 1/2 years and may damp budding hopes that businesses were taking up the spending baton from American consumers.
Separately, economist Dave Seiders of the National Assn. of Home Builders said new-home sales would set a record for all of 2003. He estimated sales would hit 1.084 million for the year, up 11% from 2002 and probably would fall only 3.5% in 2004 with no sign of letup in construction.
“Our surveys of single-family home builders show the outlook is fundamentally solid for December, and six months out, the prospects still look good,” Seiders said.
In another report, the Labor Department said new applications for state unemployment insurance, a gauge of hiring conditions, had fallen 1,000 to 353,000 last week from a revised 354,000 in the previous week.
Analysts said even a slight decline in benefit applications was encouraging.
“The message is, the downward trend of jobless claims remains in place, which implies that layoffs have decelerated and companies are probably hiring,” said economist Asha Bangalore of Northern Trust Co. in Chicago.
