U.S. consumer spending fell 1% in October, the sharpest decline in seven years, as durable-goods orders decreased by 6.2%, its biggest spill in two years.

Meanwhile, U.S. jobless claims fell slightly but remain at elevated levels.

Orders for durable goods decreased by 6.2% last month to a seasonally adjusted $193.02 billion, the third tumble in a row, the U.S. Commerce Department said Wednesday.

Wall Street only expected a decline of 3% in overall durables for October. It was the largest drop since 8.3% in October 2006.

Durables, which are goods designed to last at least three years, fell 0.2% in September, revised way down from a previously estimated 0.9% increase.

A key barometer of business equipment spending — orders for non-defense capital goods excluding aircraft — plunged by 4% in October, after decreasing 3.3% in September.

Consumer spending drops 1%

Meanwhile, U.S. consumers cut spending at the sharpest rate in seven years during October, reflecting the faltering economy.

Personal income rose at a seasonally adjusted rate of 0.3% compared to the month before, Commerce said. Income increased a revised 0.1% in September; originally, income for that month was seen 0.2% higher.

October personal consumption fell 1% compared to the month before. Spending dropped an unrevised 0.3% in September. It dropped 0.1% in August and 0.1% in July. The 1.0% drop in spending was the largest since 1.2% in September 2001.

Consumer spending makes up 70% of GDP, the broad measure of the economy.

Personal saving as a percentage of disposable personal income was 2.4% in October, up from 1.0% in September.

Initial jobless claims dip

Separately, the number of U.S. workers filing new claims for unemployment benefits fell last week as expected but remained at very high levels consistent with steep job losses.

Initial jobless claims fell 14,000 to a seasonally-adjusted 529,000 in the week ended Nov. 22, the U.S. Labour Department said. Economists had expected claims to drop 12,000. The previous week’s level was the highest in 16 years.