Markets

U.S. Capital Goods Orders Rose More Than Forecast in December

  • U.S. Capital Goods Orders Rose More Than Forecast in December

Orders for U.S. capital goods advanced more than forecast in December, showing businesses were adjusting investment plans amid prospects for stronger economic growth.

Bookings for non-military equipment excluding planes climbed 0.8 percent after increasing an upwardly revised 1.5 percent in November, data from the Commerce Department showed Friday. Orders for all durable goods — items meant to last at least three years — unexpectedly fell 0.4 percent due to a slump in the volatile military aircraft category.

More demand for capital goods, including machinery, electrical gear and communications equipment, is a sign that businesses might be following up buoyant post-election sentiment by spending more after years of tepid global growth and an energy-price slump. Further gains in investment that could contribute more to economic growth might depend on how quickly the Trump administration and Congress ease regulations and revamp corporate tax policy.

“Capex has been disappointing in recent years, and a second consecutive positive report would suggest that we have finally reached a floor and may start to see greater investment,” Bank of America Merrill Lynch economists, including Ethan Harris, head of global economics research, said in a note to clients before the report.

The median forecast of economists surveyed by Bloomberg projected a 0.2 percent increase in orders for non-defense capital goods orders excluding aircraft.

Shipments of such capital equipment, which are used in calculating gross domestic product, climbed 1 percent in December, the most since July 2015. They were up 0.6 percent the prior month, revised from a 0.2 percent gain.

Fourth Quarter

In a separate report from the Commerce Department Friday, fourth-quarter GDP rose an annualized 1.9 percent, according to the government’s first estimate. Spending on equipment climbed at a 3.1 percent rate, the first increase since the third quarter of 2015.

A 42.4 percent December surge in commercial aircraft bookings helped ease the sting of a 63.9 percent plunge in orders for military aircraft, the durables data showed. Orders for non-defense goods increased 1.7 percent.

Boeing Co., the Chicago-based aerospace company, said it received 290 orders in January, the most since July 2014 and up from 13 orders in November.

Excluding transportation equipment demand, which is volatile from month to month, bookings increased 0.5 percent in December after a 1 percent gain the prior month, the durable goods report showed.

Durable goods inventories were little changed after a 0.2 percent increase in November. Unfilled orders for non-defense capital goods excluding aircraft rose 0.5 percent for a second month.

Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

Share
Published by
Samed Olukoya

Recent Posts

Tolaram Group Drives Guinness Nigeria to First Profit in Six Months Post-Takeover

Guinness Nigeria Plc has reported a pre-tax profit of N20.1 billion for the second quarter…

49 minutes ago

FirstBank’s FirstGem: Redefining Women’s Empowerment in Nigeria

The story of women’s contribution to Nigeria’s economy is as old as the nation itself. …

1 hour ago

UBA to host Knowledge Series Webinar on New Tax Regime for SME’s

Africa’s Global Bank, United Bank for Africa (UBA) Plc, is set to host a Knowledge…

1 hour ago

Moniepoint Partners With Visa to Expand Financial Services for African Businesses

Moniepoint Inc., a leading financial platform in Nigeria, has announced a partnership with Visa, a…

5 hours ago

Ecobank and CrediCorp Launch Affordable Loan Programme for Salary Earners

Ecobank Nigeria, in partnership with the Nigerian Consumer Credit Corporation (CrediCorp), has unveiled an innovative…

6 hours ago

Wema Bank Completes N40 Billion First Tranche, Eyes N200 Billion Final Capital Raise

Wema Bank Plc has announced plans to complete its capital raise with a combination of…

6 hours ago