Factory orders for big-ticket durable goods unexpectedly declined 0.3% percent in October after rising 0.1% in September, the Commerce Department reported.

Economists said the news was a further sign that there will be no need for a rate hike by the Federal Reserve.

The drop in factory orders, a sign of restrained growth in heavy industry, was the first in five months.

The department also lowered its estimate of third-quarter growth in gross domestic product. Treasury bonds rose after the reports, because the GDP news again confirmed that inflation is dormant.

Gross domestic product - the total output of goods and services - grew at a 3.3% annual rate in the third quarter, as it did in the second, the government said. A month ago it had estimated third-quarter growth at 3.5%.

Growth is probably slowing in the current quarter and may slow even more in 1998 as Asia's economic crisis slows U.S. exports, analysts said.

That "will reduce the need to expand capacity" at manufacturers, said Larry Wipf, an economist at Norwest Corp. in Minneapolis.

Other manufacturing reports painted a mixed picture. The New York purchasing managers' factory index pointed to weaker industrial activity in the New York area, while a similar purchasing managers' index for the Chicago region posted an increase.

Applications for home mortgages declined two weeks ago, according to the Mortgage Bankers Association of America, a sign real estate markets may cool.

The latest GDP report showed the price deflator, a measure of price increases followed by Wall Street, rose at a 1.5% annual rate in the third quarter, the smallest increase since the second quarter of 1964. The price deflator measures the magnitude of price increases and detects whether higher costs drive consumers away from a product.

Real final sales - a measure of GDP that excludes the effects of inventory changes - rose at a 4.9% annual rate in the third quarter, the fastest pace since the second quarter of 1996. The report also showed that the rise in economic activity was driven by the strongest rate of consumer spending in five years and a boost in business capital investment.

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