U.S. DurableGoods Orders in December Increase 5.2% (Update4)
U.S. Durable-Goods Orders in December Increase 5.2% (Update4)
By Bob Willis
Jan. 29 (Bloomberg) — Orders for U.S. durable goods rose
more than forecast in December, indicating business investment
is holding up even as other parts of the economy weaken.
The 5.2 percent increase in appetite for computers,
aircraft and other items made to last several years was the
biggest since July, the Commerce Department said today in
Washington. The 0.5 percent gain in November was also greater
than previously reported. Excluding transportation, demand rose
2.6 percent.
“This report is a relief,;; said Ian Morris, chief U.S.
economist at HSBC Securities USA Inc. in New York. “The fear
was that capital spending could collapse, which could then see
jobs plunge.;;
Growing orders from overseas may help prevent manufacturing
from collapsing even as the U.S. skirts recession, economists
said. House prices in 20 American cities fell 7.7 percent in
November from a year ago, according to the S%26amp;P/Case-Shiller
home-price index, released today.
The dollar strengthened and yields on Treasury notes rose
after the durable-goods report. Economists forecast durable
goods orders would increase 1.6 percent in December, according
to the median of 64 estimates in a Bloomberg News survey.
The median forecasts for durable bookings excluding
transportation equipment called for a 0.1 percent increase and
estimates ranged from a 1.5 percent drop to a gain of 1.1 of
percent.
Less Confidence
Another report today showed consumer confidence dropped
this month, approaching a two-year low, as American struggled
with high energy costs and the housing slump. The Conference
Board;s index of confidence decreased less than forecast to 87.9
from a revised 90.6 the prior month, the New York-based group
said today. The index averaged 103.2 last year.
Bookings for non-defense capital goods excluding aircraft,
a proxy for future business investment, climbed 4.4 percent, the
most since March 2007. Shipments of those items, used in
calculating gross domestic product, rose 2 percent, the most
since March 2006.
Orders excluding defense equipment increased 2.9 percent.
Orders for defense equipment jumped 81 percent, led by a surge
in aircraft bookings.
The rise in total orders was led by the biggest increase in
machinery bookings since December 2006, a jump in commercial
aircraft and a 12 percent jump in communications gear.
Aircraft Demand
Orders for transportation equipment rose 11 percent as
aircraft demand climbed 12 percent.
Chicago-based Boeing Co., the world;s second-biggest
airplane maker, said it received 287 aircraft orders in
December, up from the 177 the previous month. Much of the
increase in bookings last year came from overseas.
Seven of the plane maker;s 10-biggest customers whose
identity was known last year were based abroad.
Faster growth outside the U.S. has led to record exports,
helping American companies offset some of the slowdown in
domestic demand, economists said. Shipments to overseas buyers
in November set a ninth consecutive monthly record, the Commerce
Department said earlier this month.
United Technologies Corp., the maker of Otis elevators,
Pratt %26amp; Whitney jet engines and Sikorsky helicopters, said Jan.
23 that fourth-quarter profit rose 23 percent as it benefited
from overseas demand.
Exports Help
“The U.S. economy has slowed,;; Jeffrey Immelt, chief
executive officer of General Electric Co., told investors
earlier this month. “Housing has been tough. The consumer;s
feeling some strain right now, but I would remind people that
unemployment is still low and there;s still good opportunities
for export and we see that in our own businesses.;;
On Jan. 18, GE said fourth-quarter profit rose 15 percent
on higher international sales of jet engines and power-plant
turbines, drawing more than half its annual revenue from
overseas for the first time.
The report may boost estimates for growth in the last three
months of 2007. Prior to the figures, the world;s largest
economy was forecast to expand at a 1.2 percent annual pace in
the fourth quarter, according to the median estimate of
economists surveyed by Bloomberg News. The report is due from
Commerce tomorrow.
Today;s report did suggest consumer spending may be
slowing. Orders for appliances and motor vehicles dropped in
December.
Auto Sales
Falling home prices are undermining consumer confidence and
spending power as Americans feel less wealthy and have less home
equity to tap for expenditures. Automakers General Motors Corp.
and Ford Motor Co. said they plan to cut North American
production in the first quarter.
“The ripple effect of the housing downturn and a slowdown
in motor vehicle production has caused a significant hit to the
overall manufacturing economy,;; David Huether, chief economist
of the National Association of Manufacturers said this week.
Manufacturing contracted in December at the fastest pace in
more than four years, according to a report from the Institute
for Supply Management earlier this month. A measure of orders
contracted at the fastest pace since the 2001 recession.
To contact the reporter on this story:
Bob Willis in Washington at
