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By Victoria Stilwell
By Victoria Stilwell
WASHINGTON – Orders for durable goods unexpectedly slumped in December by the most in five months, reflecting a broad-based retreat that raises the risk business investment will cool in early 2014.
Bookings for goods meant to last at least three years dropped 4.3 percent, exceeding the weakest forecast of 82 economists surveyed by Bloomberg, after a 2.6 percent gain in November that was smaller than previously reported, a Commerce Department report showed Tuesday in Washington. Orders for non-military capital goods excluding aircraft also declined.
The figures are difficult to square with other reports that showed factories were contributing to economic growth at the end of 2013 and into this year as companies geared up to meet more demand. While the weakness is hard to pin on bad weather, the across-the-board nature of the declines is similar to the retreat shown in employment last month that some economists said was related to the dip in temperatures.
“Clearly this is a weak report to cap off what was kind of a weak year for business investment,” said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh, who projected orders would decline. “We will see better business investment in 2014” as a budget agreement in Washington and pent-up demand boost business confidence and spending, Hoffman said.
Stock-index futures dropped after the report, trimming earlier gains. The contract on the Standard & Poor’s 500 Index maturing in March rose 0.2 percent to 1,779.3 at 9:04 a.m. in New York. It had been up as much as 0.6 percent earlier.
The median estimate of economists surveyed by Bloomberg called for a 1.8 percent advance in total orders. Forecasts ranged from an increase of 10 percent to a 1.2 percent drop. The gain in November was revised from a previously reported 3.4 percent advance.
Excluding transportation equipment, where demand is often volatile month to month, orders decreased 1.6 percent, the biggest decline since March, after a 0.1 percent increase in November.