US durable goods orders up, but business investment weakens

American orders for machinery and primary metals showed increases, but other indicators suggest manufacturing will stay weak in 2013.

0 January 28, 2013 at 10:38 am by

WASHINGTON – U.S. demand for long-lasting manufactured goods rose sharply in December, helped by a strong gain in volatile aircraft orders. But companies slowed orders for computers and other goods that signal investment plans, indicating manufacturing will stay weak in 2013.

The Commerce Department said Monday that overall orders for durable goods increased 4.6 per cent in December. The gains were led by a 56.4 per cent increase in military aircraft orders and a 10.1 per cent increase in commercial aircraft orders.

Orders for machinery, communications equipment and primary metals such as steel also showed increases.

Still, demand for core capital goods, a measure of business investment plans, rose just 0.2 per cent. That followed two straight monthly gains of 3 per cent.

Orders for durable goods, which are expected to last at least three years, can fluctuate from month to month. For all of 2012, durable goods orders rose 4.1 per cent. But demand for core capital goods fell 0.3 per cent for the year.

Slower growth in business orders has hurt manufacturing, which struggled to gain momentum in 2012. While orders for durable goods rebounded in the final months of last year, economists expect the overall trend to stay weak this year.

“The strength in durable goods orders for December is a most welcome development,” said Dan Greenhaus, an analyst at BTIG. “Going forward though, despite the better numbers, we still expect business investment … to slow yet again in 2013. This is a trend that remains in place given the weaker demand environment.”

The economy grew at an annual rate of 3.1 per cent in the April-June quarter. The government will provide its first look at overall economic growth in the October-December quarter on Wednesday. Many analysts believe growth slowed in the final three months of last year to less than 2 per cent.


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