Another report, however, showed a bigger-than-expected drop in first-time claims for jobless benefits last week. Claims had shot up in the wake of hurricanes Katrina and Rita, but have come down sharply in the past two weeks.
In its report on demand for long-lasting manufacturing goods, the Commerce Department said transportation orders fell 4.7 percent in September as civilian aircraft orders plummeted 41.6 percent. But even stripping out the drop in demand for transportation goods, new orders fell 1 percent.
The often-volatile report was weaker than Wall Street expected, but upward revisions to August figures tempered concerns. Economists had forecast orders for durable goods, which are meant to last three years or more, to fall just 1.1 percent in September, with orders outside transportation up 0.8 percent.
Prices for US Treasury bonds were little changed in the wake of the data, but the dollar slipped to session lows against the euro.
"It is not a big surprise, some of it is kind of a backlash to this saw-tooth pattern that we have seen in durable goods in the past - July was weak and August was very strong and now September is relatively weak," said Alan Ruskin, research director at 4CAST in New York.
Separately, the Labour Department said initial claims for state unemployment aid fell 28,000 to 328,000 last week from an upwardly revised 356,000 the prior week.
Economists had expected claims to decline to 340,000 from an original reading of 355,000 the prior week.
"We're getting close to the weekly level of new claims that was typical of the months leading up to the late-summer hurricanes and the spike in energy prices," said Patrick Fearon, senior economist at A.G. Edwards & Sons in St. Louis.
The department said some 24,000 claims reflected workers idled by hurricanes Katrina and Rita, though that number, unlike the headline figures, was not adjusted for seasonal variations. That brought the unadjusted cumulative total of claims stemming from the storms, which slammed into the US Gulf coast in late August and September, to 502,000.