New orders for key U.S.-made capital goods increased for a ninth straight month in January, pointing to continued strength in business spending on equipment early in the first quarter, though the pace of growth is slowing.
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.5% last month, the Commerce Department said on Thursday. These so-called core capital goods orders jumped 1.5% in December.
Economists polled by Reuters had forecast core capital goods orders rising 0.7%.
Orders surged 8.3% year-on-year in January, underpinning manufacturing, which accounts for 11.9% of the U.S. economy.
With many Americans remaining at home, the COVID-19 pandemic has shifted demand to household goods like electronics from services such as airline travel and hotel accommodation. But with more people expected to have access to the coronavirus vaccines by summer, demand for goods is seen slowing.
Still capital expenditure is seen supported by additional relief money from the government to aid the economy’s recovery from the pandemic. Business investment on equipment scored double-digit growth in each of the last two quarters.
In January, core capital goods orders were supported by demand for primary and fabricated metal products, as well as electrical equipment, appliances and components. But orders for machinery and computers and electronic products fell.
Shipments of core capital goods accelerated 2.1% last month. Core capital goods shipments are used to calculate equipment spending in the government’s GDP measurement. They increased 1.0% in December.
Orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, vaulted 3.4% in January after rising 1.2% in December. Durable goods orders were boosted by a 7.8% surge in orders for transportation equipment, which followed a 0.1% gain in December.
Orders for civilian aircraft soared 389.9%. That was despite Boeing reporting on its website that it had received only four aircraft orders in January, down from 90 in December.
The government recently lifted a 20-month grounding of Boeing’s best-selling 737 MAX jets that came after two crashes in Indonesia and Ethiopia
Orders for motor vehicles and parts fell 0.8% in January after advancing 2.2% in December.
(Reporting by Lucia Mutikani, editing by Chizu Nomiyama)
