Business equipment orders jump by the most in 5 months
Orders placed with U.S. factories for business equipment increased in January by the most in five months, suggesting businesses continue to make longer-term capital investments despite high borrowing costs and lingering economic uncertainty.
The value of core capital goods orders, a proxy for investment in equipment that excludes aircraft and military hardware, increased 0.8 percent last month after a downward revised 0.3 percent decline in December, Commerce Department figures showed Monday.
Core capital goods shipments, a figure that is used to help calculate equipment investment in the government’s gross domestic product report, jumped 1.1%.
With a tight labor market keeping upward pressure on wages, many companies are continuing to seek ways to make their workers more productive. Furthermore, if businesses believe a potential downturn will be short and mild, they may be more inclined to continue with capital investment plans.
That said, rising interest rates, inflation and general economic uncertainty may prompt companies to limit expenses.
Orders for machinery, computers and electrical equipment increased in January.
Bookings for all durable goods — items meant to last at least three years — dropped 4.5 percent in January, the sharpest decline since April 2020 and reflecting a sharp pullback in bookings for commercial aircraft.
Excluding transportation equipment, durablegoods orders increased 0.7 percent.
The Commerce Department’s report showed bookings for commercial aircraft, which are volatile from month to month, slumped 54.6 percent.
Boeing reported 55 orders in January compared with 250 in December. While helpful to compare the two, aircraft orders are volatile, and the government data don’t always correlate with the planemaker’s monthly figures.
Survey data have pointed to a weak manufacturing sector.
The Institute for Supply Management’s gauge of factory activity has indicated contraction for three straight months, and several regional Federal Reserve Banks showed shrinking activity in January.