US business-equipment orders down in Dec

[WASHINGTON] Orders for US capital equipment unexpectedly declined in December, capping a year of subdued business investment that weighed on the expansion last year.

Bookings for non-military capital goods orders excluding aircraft - a proxy for business investment - fell 0.9 per cent after a 0.1 per cent gain in the prior month, according to Commerce Department data Tuesday. That fell short of all estimates in a Bloomberg survey of economists that had called for a gain.

While December's figures ended 2019 on a more downbeat note, capital equipment orders for the full year rose 0.8 per cent on an unadjusted basis, to US$827 billion.

The latest data add to signs of lackluster corporate investment amid weaker overseas demand and trade uncertainty with China, though tensions have cooled. Business investment weighed on growth in both the second and third quarters, and gross domestic product data due Thursday will show whether the trend endured at year-end.

The broader measure of bookings for all durable goods, or items meant to last at least three years, increased 2.4 per cent, the most since Aug 2018, boosted by the best gain in more than a year for the volatile transportation equipment category. Transportation orders were up 7.6 per cent last month following an 8.3 per cent drop in November.

Recent manufacturing data have underscored the sector's struggle to regain its footing amid several headwinds. The Federal Reserve's measure of factory output capped an otherwise sluggish year with a December gain, and the Institute for Supply Management manufacturing gauge fell last month to the lowest level in more than a decade.

Shipments of non-defence capital goods excluding aircraft - a measure used in gross domestic product calculations -dropped 0.4 per cent, also missing estimates for an advance. The report showed the three-month annualised pace of business- equipment shipments was down 0.7 per cent in December versus a 2.9 per cent decline in November.

Excluding transportation equipment, orders slipped 0.1 per cent.

Durable goods inventories rose 0.5 per cent following a 0.4 per cent increase in the prior month.

BLOOMBERG