WASHINGTON, March 13 — Rising aircraft sales unexpectedly drove orders for US durable goods higher in January, the third monthly increase amid a recovery in business investment, according to government data released today.
But the increase masked weakness in other key areas, with the defence sector, autos and electronics suffering declines, according to the Commerce Department report.
The increase could support GDP growth in the first quarter, though it is still expected to be significantly slower than prior quarters.
New orders for US-made, big-ticket items rose 0.4 per cent to US$255.3 billion (RM1.04 trillion), the highest level since September. Economists had been expecting a 0.6 per cent decline.
Orders for civilian and defence aircraft, which can show large swings month to month, surged 15.9 per cent and 4.5 per cent, respectively.
The civilian category is heavily dominated by Boeing but the January figures will not reflect the current dilemma facing the company following Sunday’s crash of a 737 MAX 8 in Ethiopia, the second in less than five months, which prompted many countries to ground the plane.
The data were delayed due to the five-week government shutdown as President Donald Trump battled Congress for funding for a border wall.
Auto sales fell one per cent. But excluding the volatile transportation sector, durable goods orders were unexpectedly weaker, giving up 0.1 per cent. Economists had called for a 0.1 per cent gain.
Sales of primary metals, an industry benefitting from Trump’s aggressive tariff policies, fell 1.5 per cent after being flat in December.
Electronics sank 1.3 per cent, while defense items fell 2.3 per cent, adding to December’s steep losses.
But “core” capital expenditures, a category closely watched as a proxy for business investment in factories, machinery and equipment — which economists say can help determine productivity and plans for job creation — rose 0.8 per cent, recovering some of the declines in recent months.
“Durable goods orders could have been worse,” Ian Shepherdson of Pantheon Macroeconomics wrote in a note to clients.
“Will be worse soon.”
He noted that aircraft sales were now at the top of their recent range, suggesting they will likely decline.
And despite the January increase, capital expenditures, have fallen at a 5.3 per cent annualised rate over the last three months — the worst performance in more than two years.
“The dramatic weakening in Chinese manufacturing import orders points to sustained further declines ahead,” Shepherdson said. — AFP
