Orders for U.S. Capital Goods Climb by Most Since June 2014

  • Broad-based rise shows industries shook off energy malaise
  • Bookings for all durable goods increased by most since March

Orders for U.S. capital goods rebounded in January by the most since June 2014, representing a pause in manufacturing’s downturn.

Bookings for non-military equipment excluding commercial aircraft jumped 3.9 percent, more than forecast, after a 3.7 percent decrease in December that was smaller than previously reported, data from the Commerce Department showed Thursday. Orders for all durable goods -- items meant to last at least three years -- rose 4.9 percent, the most since March.

The increase was broad-based -- from cars and computers to machines and metals -- and a sign that domestic demand is a source of support for manufacturers battered by lukewarm overseas markets. At the same time, the outlook for capital spending among miners, farmers and well drillers has dimmed because of plunging commodity prices.

“It’s good in the sense that we’re not getting further deterioration,” said Brett Ryan, U.S. economist at Deutsche Bank Securities Inc. in New York. “Exports are continuing to get hit by the dollar and you have slowing global growth, cap-ex is probably going to be a bit challenged for the next few quarters.”

Shipments of non-defense capital goods excluding aircraft, which are used in calculating gross domestic product, decreased 0.4 percent last month. They were revised up to a 0.9 percent increase in December, the largest advance since June, from a previously reported 0.2 percent gain. The Commerce Department is set to issue its second estimate of fourth-quarter GDP on Friday.

The median forecast of 80 economists surveyed by Bloomberg projected total orders would increase 2.9 percent. A 54.2 percent surge in bookings for commercial aircraft helped propel the gain.

Commercial Aircraft

That followed a 29.1 percent slump the prior month even though industry data showed a jump in bookings for planes. Industry figures on aircraft orders don’t always correlate with the government statistics on a month-to-month basis, and the Commerce Department’s December data may have reflected more late-year cancellations.

Boeing Co., the Chicago-based aerospace company, said it received 67 orders in January after 223 the prior month that was the most in a year.

Excluding transportation equipment demand, which is volatile from month to month, bookings increased 1.8 percent in January after a 0.7 percent decline the prior month, according to the Commerce Department. Demand for non-defense goods rose 4.5 percent after falling 2.5 percent.

Machinery, Vehicles

Bookings for machinery climbed 6.9 percent in January, the most in three years. Orders for motor vehicles and parts were up 3 percent, the biggest gain in six months, while demand for communications equipment registered the strongest advance since November 2014.

The increase in orders came as sales also rose. Total shipments of durable goods climbed 1.9 percent in January, the most since December 2014.

That helped factories pare stockpiles. Durable-goods inventories fell 0.1 percent after a 0.2 percent increase in December.

The oil-price slump has caused energy exploration and production firms to hold back on investment, while other businesses have reconsidered spending based on a cloudier global-growth outlook, including a slowdown in the world’s second-biggest economy, China.

What’s more, the 10.5 percent surge in the dollar last year has made American-made goods more expensive overseas.

(Updates with economist comment in fourth paragraph.)

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