Orders for Durable Goods Flat

New orders for long-lasting U.S. manufactured goods were unchanged in December and new-home sales fell as a strong quarter for economic growth closed on a soft note, two reports showed Wednesday.

The Commerce Department said orders for durable goods -- items like refrigerators and cars meant to last three years or more -- were flat in December after falling a revised 2.3% the previous month.

Analysts had been expecting a solid increase of 2%, and the data raised questions about the strength of the manufacturing recovery that had been evident in other reports.

“It’s disappointing coming off a huge decline in November. I was expecting a bit of a rebound,” said Mark Zandi, chief economist at Economy.com in West Chester, Pa.

Separately, the department said sales of new U.S. homes dropped 5.1% to a seasonally adjusted annual rate of 1.06 million units as the strongest year ever for home sales ended with a whimper.

Although the December sales rate was the slowest since April, the report was not entirely bleak as the overall level of activity remained high and sales rates for October and November were ratcheted higher.

The durable goods report, which provides a key reading on the health of the manufacturing sector, showed weakness across a broad range of products.

Orders for nondefense capital goods excluding aircraft -- seen as a proxy for future business spending -- fell 0.4%. Economists believe a sustained pickup in business spending is crucial for a long-lasting economic recovery.

Orders of computers and electronic products, which dropped 2.7%, and orders for fabricated metal goods, which slipped 0.8%, were other weak spots.

In contrast, demand for transportation equipment rose 1.4% amid stronger orders for cars and aircraft. Aircraft giant Boeing Co. said it had 21 new orders in December.

Although December orders were soft, 2003 proved a turning point for the hard-hit factory sector. For the year as a whole, durable goods orders rose 2.8%, the first calendar-year increase since a 3.3% rise in 2000.

The housing report showed single-family home sales gained a strong 11.5% last year, with a record 1.085 million homes sold as the lowest mortgage rates in a generation fueled buying.