Durable-goods orders were worse than expected in November, a sign of weakness for the manufacturing economy as it struggles to rebound from the most recent recession.
New orders for big-ticket items -- goods designed to last three years or more -- decreased 1.4% after a revised 1.7% increase in October, the Commerce Department said. Economists expected a gain of 0.9%.
Excluding transportation, new orders fell 1.3% in November, following a 1.7% rise in October. The report indicated weakness pretty much across the board. Among specific categories, nondefense aircraft, motor vehicles and parts, and primary metals saw some of the steepest monthly drops.
"The report seems to reflect the growing unease and uncertainty businesses feel about the first half of next year," said Joel Naroff, head of Naroff Economic Advisors, an economic consulting firm. "They are replenishing stock when they need to, but they are just not ready to commit to bigger investments yet."
According to Naroff, the biggest uncertainty continues to be the geopolitical risk of a war in Iraq. "Companies are worried about it," he said. "It is slowing demand for manufactured goods."
Inventories of durable goods were down for the 22nd month in a row to their worst level in seven years.
On the news, Treasuries were higher, with the 10-year note up 17/32 to 100 25/32 to yield 3.90%.