In a sign that corporate investment is starting to firm up, orders for U.S. business equipment climbed more than forecast in November.
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 on December 22.The median forecast in a Bloomberg survey called for a 0.4% increase.
Demand for all durables -- items meant to last at least three years -- declined 4.6% on a slump in orders for planes.
Increased business sentiment about the economy following 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.
“We think investment spending is now beginning to rise,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics Ltd “The wild volatility in aircraft orders is a distraction from the underlying industrial story, which is that activity is stabilizing.”
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, it followed an October decrease of 0.3%, which was weaker than the 0.1% decline previously estimated.
A separate report on December 22 on GDP showed equipment investment declined at a 4.5% annualized rate in the third quarter. Outlays last increased in the same period a year ago.
The durables report showed bookings for commercial aircraft plunged 73.5% 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 prior month was revised up 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%.
By Patricia Laya