WASHINGTON, (Reuters) – New orders for key U.S.-made capital goods rose by the most in six months in January and shipments increased, pointing to strong business spending on equipment at the start of the year.
The Commerce Department said on Wednesday orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rebounded 0.8 percent, the biggest gain since July. Data for December was revised up to show these so-called core capital goods orders falling 0.9 percent instead of declining 1.0 percent as previously reported.
Economists polled by Reuters had forecast core capital goods orders edging up 0.1 percent in January. Core capital goods orders increased 3.1 percent on a year-on-year basis.
Shipments of core capital goods jumped 0.8 percent in January after an upwardly revised 0.1 percent gain in the prior month. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.
They were previously reported to have been unchanged in December. Business spending on equipment accelerated in the fourth quarter.
The January report was delayed by a 35-day partial shutdown of the federal government that ended on Jan. 25. The February report, which was scheduled for release later this month, will now be published on April 2.
The surge in core capital goods shipments could result in economists raising their first-quarter growth forecasts. Growth estimates for this quarter were slashed to as slow as a 0.2 percent annualized rate following a report on Monday showing a modest increase in retail sales in January.
The economy is losing steam as the stimulus from a $1.5 trillion tax cut fades. A trade war between the United States and China, slowing global economies and uncertainty over Britain’s exit from the European Union are other factors that are also hurting activity.
The economy grew at a 2.6 percent pace in the fourth quarter. Slowing growth and tame inflation support the Federal Reserve’s “patient” approach towards further interest rate increases this year.
In January, orders for machinery rebounded 1.4 percent after dropping 0.6 percent in December. Orders for electrical equipment, appliances and components jumped 1.7 percent after falling 0.2 percent in the prior month. But orders for computers and electronic products declined 1.3 percent, the biggest drop since March 2017. There were also decreases in orders for primary metals and orders for fabricated metal products were unchanged.
Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, increased 0.4 percent in January. That reflected a 1.2 percent rise in demand for transportation equipment. Durable goods orders increased 1.3 percent in December.
Orders for motor vehicles and parts fell 1.0 percent in January, the biggest drop since last May. Orders for non-defense aircraft increased 15.9 percent after surging 35.7 percent in December. Boeing reported on its website that it had received only 46 aircraft orders in January, a sharp step-down from the 218 in December.