Demand for U.S. Durable Goods Eased in December
January 27 2021 - 11:01AM
Dow Jones News
By Amara Omeokwe
WASHINGTON -- Growth in demand for long-lasting manufactured
goods slowed in December, as the overall economic recovery lost
momentum at the end of last year.
New orders for durable goods -- products designed to last at
least three years -- increased 0.2% to a seasonally adjusted $245.3
billion in December compared with November, the Commerce Department
reported Wednesday. That was the eighth straight month of gains,
although the increase was the smallest since last August.
Economists surveyed by The Wall Street Journal expected new
orders to increase 0.8% in December, after an upwardly revised 1.2%
rise the previous month.
New orders for nondefense capital goods excluding aircraft -- or
so-called core capital goods orders, a closely watched proxy for
business investment -- increased 0.6% in December from the previous
month, to $71.8 billion. The gain was also smaller than in recent
months.
Despite slower December growth in new orders, economists said
the report reflected positive trends for the U.S. manufacturing
industry and business investment.
"The bigger story is the continued strong gains in core orders,
which underlines that the recovery in business equipment investment
-- which looks set to rise above its pre-pandemic level in the
fourth quarter -- still has plenty of momentum," Michael Pearce,
senior U.S. economist at Capital Economics, said in a research
note.
Another reading on business investment, and U.S. economic output
broadly, will come Thursday when the Commerce Department releases
its initial estimate of gross domestic product for 2020's fourth
quarter and full year.
New orders for transportation equipment weighed on last month,
falling 1%. Orders for commercial aircraft and parts dropped
sharply, driven primarily by a decline in net orders at Boeing Co.,
according to economists.
Boeing on Wednesday reported its biggest-ever annual loss and
said it took a large financial hit on its new 777X jetliner, as the
company faces continuing challenges due to the pandemic.
Excluding transportation, a category that can be particularly
volatile, overall durable-goods orders were up 0.7%.
The overall rise in durable-goods orders last month is the
latest in a string of data that have pointed to resilience for U.S.
manufacturing and increased activity at factories amid the
coronavirus pandemic. For example, data firm IHS Markit said last
week its index of U.S. manufacturing activity rose in early January
to its highest level in more than a decade.
Consumer spending, boosted in part by stimulus from the U.S.
government, has been geared toward goods in recent months with many
consumers staying home and purchasing items such as furniture and
technology products, though household spending dropped in November
for the first time in seven months.
Write to Amara Omeokwe at amara.omeokwe@wsj.com
(END) Dow Jones Newswires
January 27, 2021 10:46 ET (15:46 GMT)
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