WASHINGTON (Reuters) – New orders for major U.S. capital goods increased for an eighth straight month in December, marking strong growth in industry spending on equipment in the fourth quarter and apparently helping to support to the economic recovery.
Orders for non-aircraft unprotected capital goods, a closely watched agent for business spending plans, rose 0.6% last month, the Commerce Department said Wednesday. These so-called basic capital goods orders fell 1.0% in November. Last month’s rise was in line with economists’ expectations.
Major capital goods orders rose 1.8% year-on-year in December. There is a demand to move away from services such as travel and hospitality to goods such as motor vehicles, electronics and medical equipment during the COVID-19 pandemic. That has contributed to an increase in production at factories, although production is still about 2.6% lower than the pre-release rate.
Manufacturing, which accounts for 11.9% of the economy, is also supported by businesses rebuilding declining investments. In December, basic capital goods orders were raised with demand for machinery and key fabricated metal products. But orders for computers and electronic products fell while orders for electrical equipment, appliances and components barely rose.
U.S. stocks were ready to open lower as investors kept an eye on corporate earnings. The dollar rose against a basket of currencies. U.S. Treasury prices were higher.
Shipments of major capital goods rose 0.5% last month. Primary capital goods transport is used to calculate equipment expenditure in the full measure of government domestic product. They gained 0.5% in November.
The data came ahead of the government’s picture of fourth-quarter gross domestic product on Thursday. According to a Reuters study of economists, GDP appears to have increased at an annual rate of 4.0% in the last quarter.
The expected sharp delay in growth from a peak of 33.4% expansion in the July-September period would reflect the nearly $ 3 trillion spending in government pandemic relief and relief of coronavirus diseases.
The government provided nearly $ 900 billion in additional fiscal stimulus at the end of December, which is likely to cut consumer spending in January after slowing in the past two months. President Joe Biden has unveiled a $ 1.9 trillion recovery plan, although some lawmakers oppose it.
The economy maintained a contraction of 31.4% in the second quarter, the deepest level since the government began keeping records in 1947. It went down to a recession in February last year. Business investment in equipment bounced back strongly in the third quarter after five straight quarterly declines.
Orders for durable goods, items from toasters to planes expected to last three years or more, gained 0.2% in December after rising 1.2% in November.
Stable goods orders were hampered by a 1.0% decline in orders for transportation equipment, which followed a 1.9% rise in November.
Orders for civil aircraft went down 51.8%. This was despite Boeing reporting on its website that it had received 90 flight orders in December, up from November 27.
The government recently built a 20-month base of Boeing’s best-selling 737 MAX jets that came after two crashes in Indonesia and Ethiopia.
Orders for motor vehicles and parts rose 1.4% in December after accelerating 2.8% in November.
Reciting with Lucia Mutikani; Edited by Jason Neely and Andrea Ricci