U.S. Durable Goods Orders Rebound More Than Expected In December
January 28 2020 - 3:11AM
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New orders for U.S. manufactured durable goods rebounded by much
more than anticipated in the month of December, according to a
report released by the Commerce Department on Tuesday.
The report said durable goods orders surged up by 2.4 percent in
December after tumbling by a revised 3.1 percent in November.
Economists had expected durable goods orders to rise by 0.5
percent compared to the 2.1 percent slump that had been reported
for the previous month.
Orders for transportation equipment led the rebound, spiking by
7.6 percent in December after plunging by 8.3 percent in
November.
The rebound in orders for transportation equipment came as
orders for non-defense aircraft and parts soared by 168.3 percent,
more than offsetting a continued nosedive in orders for non-defense
aircraft and parts.
Excluding orders for transportation equipment, durable goods
orders edged down by 0.1 percent in December after falling by 0.4
percent in November. Economists had expected a 0.2 percent
uptick.
The unexpected dip in ex-transportation orders reflected
decreases in orders for machinery, primary metals, and electrical
equipment, appliances, and components.
The report also said orders for non-defense capital goods,
excluding aircraft, a key indicator of business spending, slid by
0.9 percent in December after inching up by 0.1 percent in
November.
Shipments in the same category, which is the source data for
equipment investment in GDP, fell by 0.4 percent in December
following a 0.3 percent decrease in the previous month.
"Business equipment investment appears to have followed the 3.8%
annualized decline in the third quarter with another modest fall in
the fourth," said Andrew Hunter, Senior U.S. Economist at Capital
Economics. "Nevertheless, we still think overall GDP growth was a
reasonably solid 1.9% annualized."
He added, "And the sharp fall in corporate borrowing costs in
recent months, easing of trade uncertainty and improvement in the
capex intentions surveys all suggest that equipment investment will
start to rebound before long."
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