Orders for US Business Equipment Increase More Than Forecast
Orders for U.S. business equipment climbed more than forecast in November, a sign that corporate investment is starting to firm up.
Bookings for non-defense capital goods excluding aircraft rose 0.9%, the most since August, after a 0.2% gain a month earlier, Commerce Department data showed Dec. 22. The median forecast in a Bloomberg News survey called for a 0.4% increase. Demand for all durables — items meant to last at least three years — fell 4.6% with a slump in orders for planes.
More positive business sentiment about the economy after 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% in November, the most since the start of 2015, the government’s data showed. Bookings for machinery increased 1.3%, 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% in November. While a touch stronger than forecast, the increase followed an October decrease of 0.3%, which was weaker than the 0.1% decline previously estimated.
A separate report Dec. 22 on GDP showed equipment investment declined at a 4.5% annualized rate in the third quarter. Outlays previously increased in the same period a year ago.
The durables report showed bookings for commercial aircraft plunged 84.7% after a 94.6% surge.
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% drop. Economists’ estimates ranged from a drop of 7.5% to a gain of 0.5%. The October change was revised to a 4.8% increase.
Excluding transportation equipment, which is often volatile from month to month, durable goods orders rose 0.5% after a 0.9% advance.
Orders for military capital equipment increased 29.1%, while demand for non-defense durable goods fell 6.6%.
Durable goods inventories rose 0.1%, and unfilled orders for non-defense capital goods excluding aircraft increased 0.4%.
