The government yesterday provided further gloomy economic news as the Commerce Department reported a sharp decline in new factory orders for durable goods, a key economic indicator.

The department's report showed new orders fell 4.2 percent in October, all but wiping out a 5.2 percent rise recorded in September. The closely watched non-defense capital goods component plunged 9.4 percent.

Government analysts said the decline was centered largely in the aircraft industry, where new orders fell 31 percent, taking military and commercial sales combined. However, new orders for other goods edged up only slightly.

Economists said the statistics reflected increasing caution by businessmen in the face of record-high interest rates. Many companies are cutting back on buying plans rather than carry high financing costs.

The figures came as, separately, the department predicted that outlays for new construction would remain essentially flat next year, amounting to a 9 percent decline in volume after adjustment for inflation.

Construction volume declined about 5 percent in real terms in 1979. The 1980 estimate would leave overall construction activity nationwide next year about 20 percent below its peak of 1973.

Meanwhile, the Council on Wage and Price Stability issued a year-end report commemorating the first 12 months of President Carter's wage-price guidelines program, insisting the effort was successful despite raging inflation.

As in earlier administration assessments, the report pointed out that the bulk of this year's 13.2 percent inflation rate stemmed from factors outside the program's scope, such as increases in oil prices.

However, the document cautioned that unless inflation abates soon, "there is the clear danger that we may face both higher unemployment and an exploding underlying rate of inflation."

The figures on new orders showed overall factory orders at a seasonally adjusted $74.76 billion in October, down from $78.01 billion in September and $74.03 billion in August. Levels were 0.1 percent below a year ago.

Shipments of durable goods, however, rose 2 percent in October to a seasonally adjusted $75.59 billion after declining 0.4 percent in September to $74.11 billion. In August shipments rose 1.1 percent.

The prediction that construction expenditures would remain flat next year was contained in the department's annual "U.S. Industrial Outlook" assessment, which soon will be published as a book.

The agency said spending on privately owned construction, which rose $16 billion in 1979 to an estimated $176.3 billion, would decline by $750 million in 1980.

However, it said public sector construction spending, which rose by less than $500 million this year, should jump about $1.25 billion in 1980 to $47.25 billion. Those figures are not adjusted for inflation.

The figures on new orders for durable goods were generally in line with other key economic indicators, which have shown weakening in recent weeks, particularly since the Federal Reserve Board's move to boost interest rates.

Over the past few days, the department has published figures showing that retail sales fell 1.7 percent in October, while housing starts slumped 8 percent -- signs of a decline in the overall growth rate.