Durable Goods Orders Up, but Below Expectations

Orders for long-lasting U.S.-made goods rose in June, the government reported Thursday, but were below Wall Street expectations and a measure of business spending in the data fell unexpectedly, prompting concern about economic growth.

In another report, the number of new claims for U.S. unemployment benefits fell unexpectedly in the latest week to the lowest in more than two months.

The employment figures did little to sooth investors considering the disappointing durable goods data in a climate of fear that credit could be drying up.

New orders for goods meant to last at least three years rose 1.4 percent in June on an increase in nondefense aircraft. Wall Street economists had been looking for an increase of 1.8 percent.

Within the report, nondefense capital goods orders excluding aircraft -- seen as a good gauge of business spending -- fell 0.7 percent, well below economists' expectations for an 0.8 percent gain.

The bond market extended price gains on the data, while equities indexes fell across the board after the open.

The data added to overall concerns about the economy and a worsening climate for deal financing as investors continue to fret that the crisis in the subprime mortgage sector could lead to a sharp reduction in the availability of credit.

"It's not good, really," said Michael Metz, chief investment strategist at Oppenheimer & Co. in New York.

"You ex out transportation, it's certainly a disappointment," he said, referring to durable goods orders excluding transportation, which fell 0.5 percent. Economists had expected an 0.5 percent gain.

Investors found some minimal solace in the report showing initial jobless claims for state unemployment benefits fell for the third week to 301,000 in the week ended July 21 from an upwardly revised 303,000 the prior week.

That marked the lowest level of weekly initial jobless claims since May 12, and was below expectations for a reading of 310,000.