NEW YORK – Orders placed with United States factories for business equipment rebounded in January by the most in six months, a sign demand is withstanding concerns about slower global growth and the trade war with China.
Non-military capital goods orders excluding aircraft – a proxy for business investment – gained 0.8 percent, after a 0.9 percent decline the prior month, according to Commerce Department figures released Wednesday. The median forecast in a Bloomberg survey called for a 0.2 percent increase. The broader measure of bookings for all durable goods, or items meant to last at least three years, unexpectedly rose.
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The improvement in demand, underscored by orders for machinery and communications equipment, suggests a solid start to the year for manufacturers that should support economic growth in the first quarter. At the same time, other data for February give a more muted picture, with the Institute for Supply Management’s factory index falling to a two-year low in February and manufacturers adding the fewest workers since 2017. Some figures that are used to calculate gross domestic product also were more encouraging: Shipments of non-military capital goods excluding aircraft rose 0.8 percent after a revised 0.1 percent increase and exceeding the Bloomberg survey median of a 0.2 percent decline. Total durable-goods orders, which gained 0.4 percent from December, got a boost from the volatile transportation category, reflecting a 15.9 percent rise in bookings for civilian aircraft and parts. Separate data showed Boeing Co.’s aircraft orders fell in January to less than a quarter of the prior month’s total.
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A separate Labor Department report on Wednesday showed the producer price index rose less than forecast in February. The PPI increased 0.1 percent after a 0.1 percent decline in January. That followed data Tuesday showing consumer-price inflation cooled last month, reinforcing the Federal Reserve’s stance of patience on raising interest rates. The Commerce Department figures showed January’s three-month annualized trend for shipments of business-equipment increased 1.9 percent after a 1.6 percent gain the previous month, while the trend in orders slipped to a 5.3 percent drop after a 4 percent decline in the previous month. Excluding transportation-equipment demand, which is volatile and can move wildly on large orders in any given period, orders dropped 0.1 percent after a 0.3 percent increase. Defense capital-goods orders declined 2.3 percent in January. The Commerce report’s release, originally scheduled for Feb. 27, was delayed by the longest government shutdown in U.S. history.
Katia Dmitrieva is a reporter for Bloomberg News.
