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US core capital goods orders fall for second straight month
[WASHINGTON] New orders for key US-made capital goods fell for a second straight month in January and shipments barely rose, suggesting a slowdown in business spending on equipment after robust growth in 2017.
The Commerce Department said on Tuesday orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.2 per cent last month after declining 0.6 per cent in December.
That was the first back-to-back drop in these so-called core capital goods orders since May 2016. Economists polled by Reuters had forecast these orders rising 0.5 per cent last month.
Orders increased 8.0 per cent on a year-on-year basis.
Shipments of core capital goods edged up 0.1 per cent after an upwardly revised 0.7 per cent rise in December. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement. They were previously reported to have increased 0.4 per cent in December.
The report added to weak retail sales, industrial production and home sales data in suggesting that economic growth moderated early in the first quarter.
Business spending on equipment increased at its fastest pace in more than three years in the fourth quarter, contributing to the economy's 2.6 per cent annualized growth pace during the final three months of the year.
But spending on equipment is likely to remain supported, with companies expected to use some of their windfall from a US$1.5 trillion tax cut package to boost productivity.
The Trump administration slashed the corporate income tax rate to 21 per cent from 35 per cent effective January.
Last month, orders for machinery fell 0.4 per cent. There were also declines in orders for primary metals and electrical equipment, appliances and components. Orders for computers and electronic products rose 0.6 percent.
Overall orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, tumbled 3.7 per cent last month as demand for transportation equipment plunged 10.0 per cent. That was the biggest drop in six months and followed a 2.6 per cent jump in December.
Boeing reported on its website that it received only 28 aircraft orders in January compared to 265 in December.
Orders for motor vehicles and parts nudged up 0.1 per cent last month after slipping 0.1 per cent in December. REUTERS