NEW YORK (CNNfn) - Orders for long-lasting goods such as cars and refrigerators fell for the first time in three months in October, while consumer confidence slipped to its lowest level in more than a year in November, according to two economic reports released Tuesday.|
The reports are the latest signals that the U.S. economy is slowing, and suggest that declining consumer confidence may cause shoppers to scale back their holiday spending this year. Analysts said the unresolved presidential election also may be taking a toll on consumer's attitudes.
Orders for durable goods fell 5.5 percent in October to a seasonally adjusted $209.01 billion after climbing a revised 2.4 percent in September, the Commerce Department said. The drop far outpaced the expectations of analysts, who had expected a 1.3 percent decline, according to the consensus estimate of analysts polled by Briefing.com.
Orders for durable goods that last three years or more -- such as cars, computers and aircraft -- swing widely from month to month. But the October drop does raise signals that the economy is slowing, and perhaps more so than people had expected, analysts said.
"This orders report and other indications such as an increase in jobless claims does suggest that the auto industry is having to cut some plants. We're seeing other signs of a slowing economy," Lynn Reaser, chief economist and senior market strategist with Banc of America Capital Management, told CNNfn's Before Hours Tuesday. "Our view is that the economy is still on a soft landing track and that the economy is still on a three, three-and-a-half percent growth track. But I think the risks have increased for a sharper slowdown."
Richard Gilhooly, bond market strategist with BNP Paribas, was quoted by Reuters as saying the numbers are "notoriously volatile."
"But certainly the numbers are weaker than expected," Gilhooly said. "This is just one in a series of numbers which argues that the economy is decelerating rapidly."
Durable goods orders overall fell $12.1 billion to $209 billion, the Commerce Department reported Tuesday. Defense orders increased 13.1 percent to $6.8 billion. Non-defense orders decreased 11.3 percent to $60.7 billion.
Consumer confidence slips
Separately, the Conference Board said consumer confidence fell in November, contrasting Wall Street forecasts of a small increase. The business research group said its index dipped modestly to 133.5, well below analysts' forecasts for a reading of 136 and slightly beneath October's revised 135.8.
It was the lowest reading since October 1999.
The Conference Board index, based on a monthly survey of about 5,000 U.S. households, is closely watched because consumer spending accounts for two-thirds of the nation's economic activity. The index compares results to its base year, 1985, when it stood at 100.
"The nine-point drop in consumer confidence over the last two months underscores an anxiety about future economic conditions," said Lynn Franco, the New York-based group's chief economist. She said some uncertaintly may be related to the stalemate over the presidential election.
The downtick in consumer confidence, which combines how consumers view their present financial situation with how they see their future situations, comes entirely from consumers' more pessimistic view of upcoming months. Consumers' outlook for the future registered a sharp drop at 103.4, down from 108.4 in the prior month.
The report showed consumers believe jobs will be slightly harder to get and that there won't as many in the next six months. Fewer consumers foresee business conditions or employment improving in the next six months. However, 27.6 percent of consumers polled think their incomes will rise in that time period, up from 24.6 percent in October.
-- from staff and wire reports