* Durable goods orders rise 3.3 percent in September
* Orders ex-transport fall, business spending proxy slips
* New home sales rise 6.6 percent, prices up
(Updates markets to close)
By Lucia Mutikani
WASHINGTON, Oct 27 Demand for a range of
long-lasting U.S. manufactured goods unexpectedly fell last
month and a gauge of business spending plans also dropped,
underscoring the economic recovery's tepid pace.
Another report from the Commerce Department on Wednesday
showed new home sales continued to bounce along the bottom,
leaving intact expectations in financial markets that the
Federal Reserve would ease monetary policy further next week.
"You are seeing a convergence in the different sectors of
the economy around the slow-growth scenario," said Zach Pandl,
an economist at Nomura Securities International in New York.
Orders for durable goods excluding transportation fell 0.8
percent after rising 1.9 percent in August as bookings for
communications equipment tumbled sharply. Economists, who track
this core figure closely, had expected a 0.5 percent gain.
Overall orders, however, jumped by 3.3 percent -- the
largest increase since January -- lifted by a surge in demand
for aircraft. Orders had dropped 1 percent in August and
economists had looked for a 2 percent increase in September.
Durable goods orders: r.reuters.com/huh52q
MBA mortgage indexes: r.reuters.com/bub42q
New home sales: r.reuters.com/kup52q
The second report showed new home sales rose 6.6 percent
last month to a still-weak 307,000 unit annual rate.
While the durable goods data supported other recent
evidence of cooling in manufacturing, the home sales figures
pointed to some improvement in the battered housing market,
leading traders in U.S. financial market to anticipate less
aggressive action from Fed policymakers who meet on Nov. 2-3.
U.S. stocks ended mixed, with the Dow industrial average
and S&P 500 weaker and the Nasdaq Composite slightly higher.
The dollar pushed into positive territory against major
currencies for the year. Prices for U.S. government debt fell.
Analysts expect Fed officials next week to announce bond
purchases of at least $100 billion a month to push borrowing
costs lower to help rejuvenate the economy's sputtering
recovery from the worst recession in 70 years.
The central bank, which cut overnight interest rates to
near zero in December 2008, has already bought about $1.7
trillion worth of Treasury and mortgage-related debt.
Its decision will be announced a day after Tuesday's
congressional election, which is widely seen as a referendum on
President Barack Obama's performance on the economy. His
Democratic Party is seen facing large losses.
BUSINESSES HESITANT TO SPEND
Business spending, which has been growing strongly, is
starting to slow down.
Non-defense capital goods orders excluding aircraft, a
closely watched proxy for business investment, slipped 0.6
percent in September after a 4.8 percent increase in August.
Markets had expected a 0.8 percent gain.
"Overall, these figures suggest that the industrial
recovery is nearing an end. Without it, the overall economy is
going to struggle," said Paul Dales, a U.S. economist at
Capital Economics in Toronto.
The government is expected to report on Friday that the
economy expanded at a 2 percent annual rate in the third
quarter, a touch faster than the second quarter's 1.7 percent
pace but too sluggish to cut into a 9.6 percent jobless rate.
Last month, overall durable goods orders were boosted by a
105 percent surge in demand for non-defense aircraft and parts
that more than reversed a 30 percent plunge in August.
Inventories of durable goods inventories rose for a ninth
straight month, while shipments, which go into the calculation
of gross domestic product, were down for the second consecutive
The housing data added to recent signs of stability in the
housing market after a slump in activity following the end of a
tax credit for home buyers. Data earlier this week showed sales
of previously owned homes increased in September.
Applications for loans to buy homes, a tentative early
indicator of sales, rose 3.9 percent last week, a separate
report from the Mortgage Bankers Association showed.
The number of new homes available for sale last month
dropped to a 42-year low of 204,000, the Commerce Department's
report showed. At September's sales pace, that represents eight
months' supply, down from 8.6 months' worth in August.
Analysts called that a step in the right direction, but
cautioned investigations into the processing of foreclosures by
some banks could harm the housing recovery.
"Once the (foreclosure) moratoriums end, the new-home
market will have to contend with a large number of distress
sales again," said Celia Chen, a senior director at Moody's
Analytics in West Chest, Pennsylvania.
The median sales price for a new home rose 1.5 percent from
August to $223,800, the highest since May. Compared to
September last year, prices rose 3.3 percent.
(Editing by Neil Stempleman)