Orders for manufactured durable goods in December increased a less-than-expected 0.3%, mostly because of a 2% drop in transportation orders. However, it was the first rise since September, and excluding the transportation sector, orders advanced a somewhat brisker 0.9%. The gains were attributed mostly to orders for machinery and metals.

In addition, shipments of durable goods rose 2.9%, unfilled orders dropped for the 15th straight month, and inventories fell for the 12th month in a row.

The employer cost index—which measures employer costs for wages, salaries, and benefits—increased 0.5% in the fourth quarter. The figure exceeded economists' expectations, but was still low by historical standards. Compensation and benefits both increased 0.5%. While there has been improvement, compensation isn't expected to grow more until the labor market improves. Companies continue to focus on labor costs as they struggle to balance their budgets.

The approaching end of the first-time homebuyer tax credit led to December declines of 16.7% in existing-home sales and 7.6% in new-home sales; the original November 30 deadline to receive the tax credit had resulted in an influx of sales in the fall, but the pace weakened as the deadline drew closer. Although Congress expanded the tax credit and extended it until April, demand in December was weak in both categories. It was a larger retreat than economists predicted. New-home sales were also lower than expected. Months of inventory for existing- and new-home sales increased because of the sales decline.

Consumer confidence rose for the third straight month, though the Conference Board index reading of 55.9 remains low by historical standards. The index is at its highest level since September 2008, a key inflection point in the financial crisis. Most of the gain came from the present situation measure, which increased 4.8 points in January. The expectations measure increased 0.6 points. Consumers' view of the labor market and their purchasing plans both continued to recover a bit.

Monday's reports on personal income, construction spending, and manufacturing activity usher in an eventful week on the economic calendar. The ISM nonmanufacturing report is set for Wednesday, productivity and costs and factory orders on Thursday, and the employment situation and consumer credit on Friday.