Sales of big-ticket items take unexpected drop

U.S. manufacturers saw demand for big-ticket products drop by a sizable 0.9 percent in August, raising new questions about whether this sector of the economy is losing a grip on its own fragile recovery.

The unexpected decrease in new orders for “durable goods” — costly manufactured items expected to last at least three years — was the first and biggest decline in four months. It marked a reversal from the 1.5 percent increase in orders registered in July, the Commerce Department reported Thursday.

Above, Earl Johnson, of Cleveland, looks at kitchen ranges Thursday at the HH Gregg store in Brooklyn, Ohio.

Investigation

Freddie Mac woes grow

Mortgage giant Freddie Mac, beset by accounting and management troubles, disclosed Thursday that it underreported its earnings by at least $4.5 billion due to errors and manipulations of accounts, possibly exceeding the upper level of its previous estimate.

Freddie Mac said the restatement of its earnings for the 2000-2002 period, originally expected by Tuesday, would be delayed until November.

The latest news from the U.S.-sponsored company came as a House panel considered the Bush administration’s new proposal for a stronger government hand over Freddie Mac and its larger rival Fannie Mae.

Real Estate

Mortgage rates decline

After rising sharply since late June, rates on benchmark 30-year mortgages retreated for the third week in a row, a trend that should help keep the housing market humming.

For the week ending Sept. 26, the average rate on 30-year mortgages dipped to 5.98 percent from 6.01 percent a week ago, the mortgage company Freddie Mac reported Thursday in its weekly survey of rates.

The rate was the lowest since late July, when 30-year mortgages averaged 5.94 percent.

Rates on 15-year fixed-rate mortgages, a popular option for refinancing, held steady at 5.30 percent this week.

Utility

Aquila sale collapses

Aquila Inc.’s deal to sell its stake in a British utility has failed because bondholders would not take 86 percent of their bonds’ value, Aquila announced Thursday.

More than a year ago, Scottish and Southern Energy PLC, based in Perth, Scotland, agreed to buy Aquila Sterling Ltd., the owner of Midlands Electricity, from Kansas City, Mo.-based Aquila and FirstEnergy Corp. of Akron, Ohio, in a deal valued at $1.8 billion.

The deal was subject to agreement by holders of the outstanding Avon Energy Partners Holdings bonds to accept a cash payment equivalent of 86 percent of face value from Aquila Sterling.

Aquila operates the natural gas utility in Lawrence.