Core capital goods orders
dip, but shipments surge
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[March 24, 2017]
March 24 (Reuters) - - New orders for key U.S.-made capital goods
unexpectedly fell in February, but a surge in shipments amid demand for
machinery and electrical
equipment supported expectations for an acceleration in business
investment in the first quarter.
The Commerce Department said on Friday that non-defense capital goods
orders excluding aircraft, a closely watched proxy for business spending
plans, dipped 0.1 percent last month after rising 0.1 percent in
Shipments of these so-called core capital goods jumped 1.0 percent after
declining 0.3 percent in January. Core capital goods shipments are used
to calculate equipment spending in the government's gross domestic
Economists polled by Reuters had forecast core capital goods orders
rising 0.6 percent last month. Orders for machinery inched up 0.1
percent while shipments increased 0.9 percent.
Orders for electrical equipment, appliances and components advanced 2.2
percent, the biggest increase in seven months, and shipments rose 1.5
A recovery in oil prices from multi-year lows is driving demand for
equipment in the energy sector, helping to lift the manufacturing
Manufacturing, which accounts for about 12 percent of the U.S. economy
is also being underpinned by a burst of confidence amid promises by the
Trump administration to slash taxes for businesses, boost infrastructure
spending and repeal some regulations.
The Federal Reserve last week escribed business investment as appearing
to have "firmed somewhat." Economists expect business spending on
equipment to pick up in the first quarter after a 1.9 percent annualized
growth pace in the fourth quarter. Still, that will likely be
insufficient to offset the drag on GDP from slower consumer spending and
a wider trade deficit.
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Containers are seen stacked up at the ports of Los Angeles and Long
Beach, California February 6, 2015 in this aerial image. REUTERS/Bob
Atlanta Fed is forecasting the economy growing at a 0.9 percent rate in the
first quarter after expanding at a 1.9 percent pace in the final three months of
Last month, a 4.3 percent jump in demand for transportation equipment offset the
dip in core capital goods bookings, and hoisted overall orders for durable
goods, items ranging from toasters to aircraft that are meant to last three
years or more, 1.7 percent.
Durable goods orders had increased 2.3 percent in January. Civilian aircraft
orders soared 47.6 percent in February.
Boeing reported on its website that it had received orders for 43 aircraft last
month, up from 26 in January.
Orders for motor vehicles and parts fell 0.8 percent in February, while orders
for defense aircraft declined 12.8 percent.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
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