US durable goods orders drop 4.3%
By Martin Crutsinger ,AP
January 29, 2014, 12:08 am TWN
WASHINGTON -- U.S. businesses cut back sharply on their orders for long-lasting manufactured goods in December with a key category that signals business investment plans falling by the biggest amount in five months.
Orders for durable goods fell 4.3 percent in December compared with November, when orders had risen 2.6 percent, the Commerce Department reported Tuesday. The weakness was led by a big 17.5 percent drop in the volatile category of commercial aircraft.
There was widespread weakness in a number of categories including a 1.3 percent decline in demand for non-defense capital goods excluding aircraft. This category is viewed as a proxy for business investment plans.
Some of the December weakness probably reflected a temporary dip following November's big jump which had been driven by businesses rushing to take advantage of expiring tax breaks.
The December decline came as a surprise to economists. The consensus view among economists was that orders would post a moderate rise reflecting what they believe is an improving outlook for U.S. manufacturers.
Besides the big drop in orders for commercial aircraft, orders for motor vehicles and parts fell 5.8 percent. That was likely a temporary dip given the strong sales that automakers are enjoying.
Orders for primary metals such as steel fell 2.1 percent while demand for computers and other electronic products dropped 7.8 percent. Orders for machinery rose 0.8 percent.
A key gauge of manufacturing activity remained near a 21/2 year high in December. The Institute for Supply Management said its manufacturing index registered 57 in December, only slightly down from a 57.3 reading in November. The December level was still the second-highest reading since April 2011. Any reading above 50 signals growth in manufacturing.
Consumers are buying more autos and houses, boosting demand for such items as steel, furniture and other manufactured goods.
Economists are hoping that 2014 will mark a turning point for an economy that has performed at sub-par rates for much of the time since the recession ended in June 2009.