New orders for long-lasting U.S. manufactured goods edged higher last month and the number of workers filing applications for jobless aid fell last week, indicating the economy remains on a steady recovery path.
The Commerce Department said on Thursday durable goods orders rose 0.3 percent in December, held back by a surprise drop in civilian aircraft orders that analysts saw as temporary. Economists had expected orders to climb 2 percent.
On a bright note, a proxy for business spending plans -- non-defense capital goods orders excluding aircraft -- rose a solid 1.3 percent.
Overall the report suggests that business spending is rising at a healthy but moderate pace, said Julia Coronado, senior U.S. economist at BNP Paribas in New York.
Separately, the Labor Department said initial claims for state unemployment benefits dropped 8,000 to 470,000 last week, after rising for three weeks in a row.
Economists had forecast claims dipping to 450,000 from a previously reported 482,000 for the prior week, which had been elevated due to the processing of a backlog of applications from the holidays.
U.S. stocks fell as investors focused on the jobless claims report. Caution ahead of the Treasury's auction of $32 billion worth of seven-year notes pulled prices for U.S. government debt lower. The dollar raced to a 6-1/2 month high against the euro on worries over the fiscal health of Greece and Portugal.
The report showed the four-week moving average for new jobless claims, a better measure of underlying trends, rose 9,500 to 456,250 last week. It was the second consecutive increase, after 19 weeks of decline.
The jobless claims numbers suggest that the job market is still struggling, said Alan Gayle, senior investment strategist at RidgeWorth Investments in Richmond, Virginia.
Stubbornly high unemployment is overshadowing the economic recovery from the worst downturn since the 1930s. On Wednesday, President Barack Obama in his annual State of the Union address said jobs must be our number one focus in 2010.
AIRCRAFT ORDERS SURPRISINGLY FELL
Civilian aircraft bookings fell 38.2 percent last month, building on a 40.0 percent drop in November, the Commerce Department said. Plane maker Boeing said in December it had received 59 orders, up from November's nine, and analysts had expected that to lift the government's measure of orders.
Presumably those orders will show up eventually, said David Sloan, economist at 4Cast in New York.
Durable goods orders are a leading indicator of manufacturing activity, which in turn provides a good measure for overall business health.
For a graphic on U.S. durable goods, see
The data came ahead of Friday's release of the government's fourth-quarter gross domestic product report, which is expected to show an acceleration in the growth pace as businesses liquidated inventories less aggressively and in some cases started rebuilding stock.
A Reuters survey forecast the economy expanded at an annual rate of 4.6 percent in the October-December period, which will be the fastest pace in nearly four years, after growing 2.2 percent in the third quarter.
The Federal Reserve on Wednesday painted a cautiously optimistic picture of the economy and stuck to its promise to keep interest rates near zero for an extended period to ensure a sustainable recovery.
New durable goods orders excluding transportation rose 0.9 percent last month after increasing 2.1 percent in November, the department said. Analysts polled by Reuters had expected new orders, excluding transportation, to rise 0.5 percent.
Durable goods inventories fell 0.2 percent last month after slipping 0.2 percent in November. Shipments, which go into the calculation of gross domestic product, surged 2.9 percent last month-- the biggest rise since July. They rose 0.8 percent in November.
(Additional reporting by Doug Palmer in Washington and Ryan Vlastelica in New York; Editing by Andrea Ricci)