By Courtney Schlisserman (Bloomberg) – Orders for goods meant to last several years unexpectedly fell in October, restrained by a drop in demand for defense equipment and a reminder the economic recovery will be slow to gain speed.

The 0.6 percent decrease in bookings for durable goods followed a revised 2 percent gain in September that was larger than previously estimated, figures from the Commerce Department showed today. Excluding defense bookings, orders rose 0.4 percent.

Concern that consumer spending may retrench as unemployment mounts will probably cause companies to limit spending on new equipment and keep inventories lean. While another Commerce Department report showed consumer spending rose more than forecast last month, the world’s largest economy needs a rebound in manufacturing and housing for the recovery to gain momentum.

“Many firms are still hesitant to make capital investments,” said Guy Lebas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “What we saw in the month of October was a big, big drop in machinery orders after a large increase in September.”

Commerce Department figures also showed spending by consumers rebounded in October more than anticipated. The 0.7 percent increase in purchases was larger than the median estimate of economists surveyed by Bloomberg News and followed a 0.6 percent September drop. Incomes climbed 0.2 percent, also exceeding expectations.

Jobless Claims

A separate report from the Labor Department today showed the number of Americans filing claims for unemployment benefits fell last week to the lowest level since September 2008. Claims declined to 466,000 in the week ended Nov. 21 from 501,000 a week earlier, the report showed.

Futures on the Standard & Poor’s 500 Index were up 0.4 percent to 1,107.2 at 9:08 a.m. in New York.

Economists forecast durable-goods orders would increase 0.5 percent, according to the median of 75 projections in a Bloomberg News survey. Estimates ranged from a decline of 1 percent to a 2.1 percent gain.

Excluding transportation equipment, orders fell 1.3 percent, the biggest decrease since March. These bookings were forecast to increase 0.7 percent.

Less demand for machinery, computers, communications equipment in addition to defense gear contributed to last month’s decrease.

Shipments for non-defense capital goods excluding aircraft, which is used in calculating gross domestic product, fell 0.2 percent in October. Bookings for such goods, a proxy for future business spending, decreased 2.9 percent in October.

Emerging Rebound

The figures raise questions on the sustainability of the emerging rebound in business investment. A report from the Commerce Department yesterday showed the economy grew at a 2.8 percent annual pace last quarter, less than previously estimated. Spending on equipment and software climbed at a 2.3 percent annual pace, the first gain in more than a year.

Demand for transportation equipment increased 1.5 percent, led by a 51 percent surge in orders for commercial aircraft. Auto bookings fell 0.1 percent.

Auto production is moderating after surging in the three months through September as “cash-for-clunkers” incentives to buy cars expired in late August. Motor vehicle and parts production fell 1.7 percent in October, after an 8.1 percent increase a month earlier, according to industrial production figures released from the Federal Reserve on Nov. 17.

Auto Sales

Even so, auto sales rose at a 10.45 million annual rate in October, according to Bloomberg data. Ford Motor Co. Chief Executive Officer Alan Mulally said Nov. 3 he is taking a “cautiously optimistic point of view” on 2010 and the automaker will be “solidly profitable” in 2011.

Inventories were little changed last month, today’s report showed.

Smaller reductions in inventories following the biggest plunge in stockpiles on record will probably support economic growth in comings months. The economy will grow at a 3 percent annual rate this quarter, according to the median projection of economists in a Bloomberg News survey earlier this month.

“We exited the year pretty low on inventory — we saw higher demand for printers as we went through the end of the year,” Hewlett-Packard Co. Chief Executive Officer Mark Hurd said in an interview Nov. 23. Hewlett-Packard reported personal- computer sales for its fiscal fourth quarter that topped some analysts’ estimates.

Also helping support manufacturing, exports rose in the five months through September, according to Commerce Department data.

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