Orders for U.S. Business Equipment Increase More Than Forecast

  • Figures provide some evidence investment may be stabilizing
  • Broader gauge of durables orders falls on slump in aircraft

U.S. Third-Quarter GDP Revised Higher to 3.5%

Orders for U.S. business equipment climbed more than forecast in November, a sign corporate investment is starting to firm up.

Bookings for non-defense capital goods excluding aircraft rose 0.9 percent, the most since August, after a 0.2 percent gain a month earlier, Commerce Department data showed Thursday. The median forecast in a Bloomberg survey called for a 0.4 percent increase. Demand for all durables -- items meant to last at least three years -- fell 4.6 percent on a slump in orders for planes.

Increased business sentiment about the economy following the presidential election has the potential to boost sales of productivity-enhancing equipment. Leaner inventories, resilient household demand and the longer-term prospects of more infrastructure spending may help boost durable-goods orders even as a soaring dollar risks slowing exports.

“There’s some early evidence that business investment may be stabilizing,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “Investment has been a sore spot for the U.S. economy for a little bit now. Going forward we should see investment pick up.”

Orders for communications equipment jumped 6.7 percent in November, the most since the start of 2015, the government’s data showed. Bookings for machinery increased 1.3 percent, the biggest gain since January, while orders for primary metals were the strongest this year.

Shipments of non-defense capital goods excluding aircraft, used in calculating gross domestic product, rose 0.2 percent in November. While a touch stronger than forecast, it followed an October decrease of 0.3 percent, which was weaker than the 0.1 percent decline previously estimated.

A separate report Thursday on GDP showed equipment investment declined at a 4.5 percent annualized rate in the third quarter. Outlays last increased in the same period a year ago.

The durables report showed bookings for commercial aircraft plunged 73.5 percent after a 94.6 percent surge.

Airplane Orders

Boeing Co. said it received 13 orders for aircraft in November, down from 85 in October. The Chicago-based aerospace company’s figures explain why economists projected a decline in orders for all big-ticket goods.

The median forecast for total durable goods in the Bloomberg survey called for a 4.8 percent drop. Economists’ estimates ranged from a drop of 7.5 percent to a gain of 0.5 percent. The prior month was revised up to a 4.8 percent increase.

Excluding transportation equipment, which is often volatile from month to month, durable goods orders rose 0.5 percent after a 0.9 percent advance.

Orders for military capital equipment increased 29.1 percent, while demand for non-defense durable goods fell 6.6 percent.

Durable goods inventories rose 0.1 percent, and unfilled orders for non-defense capital goods excluding aircraft increased 0.4 percent.

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