Mixed Data Offer Little Direction for Investors

Orders for long-lasting U.S. goods slipped unexpectedly in October, but new home sales rose, consumer sentiment brightened a bit this month and claims for jobless aid fell, a mixed bag of reports showed on Wednesday.

The raft of data, coming just ahead of the traditional kickoff of the U.S. holiday-shopping season on Friday, offered little direction to markets.

"It looks to me like the economy is growing at a reasonable pace," said Doug Lee, head of the forecasting firm Economics from Washington. "It's not a spectacular pace but we are into the fourth year of an expansion and growing close to trend is not a bad thing."

Orders for durable goods — big-ticket items meant to last at least three years — fell 0.4 percent in October, despite strong military demand, a Commerce Department (search) report showed. Forecasters had expected a gain of 0.5 percent.

But in a separate report, the department said new homes sales rose 0.2 percent to a 1.23-million unit annual sales pace, the third highest on record. Economists, who had looked for sales to tail off slightly, pinned the strength on low mortgage rates.

A University of Michigan index measuring consumer confidence (search) rose to 92.8 in November from 91.7 last month, although it came in below a preliminary reading of 95.5 and disappointed analysts who had forecast a rise to 96.0.

In one clear piece of good news, the Labor Department (search) said initial claims for jobless benefits dropped to their lowest level in two months, pulling a closely watched four-week average to its lowest point in four years.

U.S. stock prices gained, helped by oil's extended stay below $50 a barrel, while prices for Treasury bonds finished slightly lower.

The dollar failed to find support and hit a new record low against the euro and a 4-1/2 year low versus the yen.

The durable goods report, a key measure of the health of the manufacturing sector, showed strong demand for military aircraft but widespread weakness elsewhere, with orders for computers, cars and civilian planes all slumping.

Non-defense durable goods orders dropped 1.5 percent, the sixth decline in the last seven months, and orders excluding transportation fell 0.7 percent, the department said.

While those two categories and the overall orders figure were weaker than expected, upward revisions to September's numbers took some of the sting out.

The Labor Department's report on state unemployment benefits (search) showed first-time filings fell a larger-than-expected 12,000 to 323,000 in the week ended Nov. 20.

The drop pulled a closely watched four-week average of initial claims, which smooths weekly volatility for a better view of underlying trends, to its lowest level in four years.

In addition, the number of people who continued to draw benefits after an initial week of aid fell to a 3-1/2 year low, a further sign the long-ailing jobs market was on the mend.

Economists said improving employment prospects should help underpin consumer spending but expressed disappointment at the meager rise in the consumer confidence index.

"With the (U.S. presidential) election over, energy prices declining and the labor market apparently improving, we would have expected a more significant boost to attitudes," said Stephen Stanley, chief economist with RBS Greenwich Capital.

While economists expect consumers to keep lending support to the expansion, they are looking for businesses to step up their outlays and shoulder more of the burden.

On that score, the durable goods report disappointed, particularly in light of a tax provision expiring at year end designed to boost business investment.

Civilian capital goods orders, excluding aircraft — a proxy for business spending plans — fell 3.6 percent last month, reversing much of September's 5.2 percent rise.