US core capital goods orders and shipments increase solidly in December

[WASHINGTON] New orders for key US-manufactured capital goods increased more than expected in December and shipments of these products surged, cementing economists’ expectations that business spending on equipment remained solid in the fourth quarter.

Non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending, rose 0.6 per cent after an upwardly revised 0.8 per cent increase in November, the Commerce Department’s Census Bureau said on Wednesday (Feb 18).

Economists polled by Reuters had forecast these so-called core capital goods orders advancing 0.4 per cent after a previously reported 0.4 per cent gain in November. Shipments of core capital goods jumped 0.9 per cent after climbing 0.2 per cent in November.

The report, which was delayed by last year’s shutdown of the federal government, was published ahead of the Bureau of Economic Analysis’ advance estimate of gross domestic product for the fourth quarter on Friday.

Business spending on equipment is being boosted by an artificial intelligence (AI) investment boom, which has fuelled rapid growth in data centres.

But tariffs on imports have stifled manufacturing that is not tied to AI. Economists expect a broad manufacturing sector recovery this year as some of the uncertainty from tariffs fades and cuts take effect.

SEE ALSO

US consumer prices rise less than expected in January

US producer prices post biggest gain in five months, businesses passing on tariffs

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Business spending on equipment is forecast to have notched a fourth straight quarter of growth. The economy likely grew at a 3 per cent annualised rate in the fourth quarter after expanding at a 4.4 per cent pace in the July-September quarter, a Reuters survey of economists showed. REUTERS