The numbers: Industry orders for durable goods such as machinery, equipment and new cars rose in December for the eighth month in a row, indicating that companies are preparing for a stronger economic recovery in the U.S. later in the new year.
The rise in orders last month was lower than Wall Street had expected, but the pull was largely due to a decline in demand for new planes since the outbreak began. Economists conducted by the Dow Jones and The Wall Street Journal had forecast a 0.8% rise.
If transportation is banned, new orders rose strongly by 0.6%. Constant increases and decreases in transport often outweigh monthly changes in the level of demand.
Read: The economy appeared to have grown 4.1% by the end of 2020, but GDP saw weakness
What happened: Orders for new cars and lorries rose 1.4% in the last month of 2020. Car sales have risen sharply during the pandemic as car buyers took advantage of ultra-low rates for locking in good conditions.
Orders for planes were negative again, as they have been almost all year round. Very few airlines are ordering new planes with so little travel going on due to the pandemic of coronavirus infection.
Outside of transportation, business orders were stable. They arose for tools, key metals and fabricated parts used in a wide range of industrial products.
The only other notable decline was in computers and related products.
A key measure of business investment rose 0.6% last month, surpassing pre-crisis levels for the third month in a row. These are called prime orders and do not exclude defense and transport.
See: MarketWatch coronavirus recovery controller
The big picture: Not only are manufacturers pumping out an abundance of goods, they have increased investment with the expectation of strong sales in the coming months. That bodes well for the economy in 2021.
Just don’t expect a quick turn. It could still be terrible before the widespread vaccination, the pandemic and the economy starts in higher gear.
Read: Consumer confidence goes against vaccine expectations and economic development
What are they saying? “This report shows a strong upward trend for business investment as the longest year ever came to an end,” said Jennifer Lee, senior economist at BMO Capital Markets.
Market response: Dow Jones industrial average DJIA,
and S&P 500 SPX,
ready to open lower in trades Wednesday.
The Federal Reserve will conclude a meeting two days later Wednesday, but the central bank is not expected to make major changes in its strategy to help the economy.