Durable-Goods Orders Increase a Record 12.8%

Orders for durable goods rose more in October than in any other month in the last nine years, and new-home sales unexpectedly increased, spurring hopes that the economy may soon recover from nine months of recession.

The 12.8% rise in durable-goods orders, to $184.8 billion, followed a 9.2% decrease in September and was led by increased bookings for weapons, ships, military aircraft and cars, the Commerce Department said. Sales of new homes rose 0.2% to an annual rate of 880,000 houses, the fastest in four months.

Separate reports showing an increase in new unemployment benefits claims and a drop in help-wanted advertising signal that weak labor markets could restrain the economy’s recovery.

The factory orders report is “reassurance that a recovery is in the works,� said Diane Swonk, chief economist at Bank One Corp. in Chicago. Still, “the situation will get worse before it gets better.�

Thomas Hoenig, Federal Reserve Bank of Kansas City president, said the economy has yet to show clear signs of recovery. “We may be at or near the bottom, but it’s too early to know,� Hoenig said. “It’s going to be a weak fourth quarter.�

The Labor Department reported that new claims for unemployment benefits rose by 54,000 to 488,000 in the week ended Saturday. The report also showed that the number of people continuing to draw benefits in the week ended Nov. 17 jumped to 4 million, the highest in 19 years, from 3.7 million.

An index of help-wanted advertising in major U.S. newspapers fell in October to 46, the lowest since 1964, the Conference Board said. In September, the index was at 52.

Fed policymakers have reduced the benchmark overnight bank lending rate 10 times this year. They meet next on Dec. 11. If necessary, the Fed has room to lower interest rates again, Hoenig said.

The increase in durable-goods orders was the largest since the government started keeping comparable statistics in 1992.

Inventories at some auto dealers and electronics retailers have fallen enough that companies are considering boosting production.

Factories have shouldered the burden of an economy that researchers say slipped into recession in March. Industrial production has fallen in 12 of the last 13 months, the weakest performance since the 1981-82 recession, according to Fed statistics.

Orders for defense-industry hardware jumped 206.3% in October, the Commerce Department said. Lockheed Martin Corp., the biggest defense contractor, last month won a contract valued at as much as $200 billion to develop the Joint Strike Fighter, the most expensive program in military history. The company booked $19 billion of that total in October.

Orders for computers and related products increased 18.4% last month. Non-defense capital goods orders rose 7.4%.

Computer retailers Gateway Inc. and Hewlett-Packard Co. have said they’re optimistic about holiday sales. HP said sales the day after Thanksgiving beat internal forecasts.

Orders for automobiles and parts rose 10.6% in October after a 15% slump in September. Auto makers sold new vehicles at a record pace last month, depleting inventories.

Ford Motor Co. said this week it might build more North American cars and trucks in the first quarter than expected because no-interest loans brought stockpiles to the lowest since March 1992.

Aircraft orders surged 233.2% in October. Boeing Co. reported orders for 37 commercial planes last month, according to its Web site. That’s up from 30 in September.

Inventories of durable goods fell 0.4% in October, the ninth straight decline. Shipments of big-ticket items rose 3.2% last month, the first rise since May.

The Commerce Department also reported the pace of new-home sales last month was faster than the 850,000 expected by analysts.