By Josh Mitchell
WASHINGTON--Demand for big-ticket manufactured goods rebounded
last month, suggesting the economic recovery remains on track while
also hinting at sluggish business spending.
Orders for durable goods--products such as refrigerators and
cars designed to last at least three years--rose a seasonally
adjusted 2.8% in January from a month earlier, the Commerce
Department said Thursday. The rise ended two months of declines and
exceeded economists' expectations of a 0.6% gain.
A surge in civilian-aircraft demand, a highly volatile category,
drove the increase. Excluding transportation items, orders rose a
modest 0.3%.
Meanwhile, a key measure of business investment climbed for the
first time in five months, a welcome sign that nonetheless did
little to change the broader picture of cautious spending. Some
economists linked the weak spending to declining investment in oil
drilling after a sharp slide in energy prices.
"After months of weakness, business spending appears to be on
somewhat firmer footing," Sterne Agee Chief Economist Lindsey
Piegza said in a note to clients. But she added that "lower prices
and a slowdown in manufacturing activity after quarters of
inventory gains are likely to keep business investment under
pressure."
Figures for durable goods are volatile and typically revised,
but the broader trend suggests factories are facing a modest pickup
in demand from customers. Compared with a year earlier, overall
orders increased 1.6% in January.
The measure of business investment--orders for nondefense
capital goods excluding aircraft--climbed 0.6% last month from
December. That category, a measure of spending on equipment and
software, had declined throughout the fall.
Weak business investment contributed to the economy's modest
2.6% annualized growth in the fourth quarter. Nonresidential fixed
investment rose at a 1.9% annual rate in October through December,
down from the third quarter's 8.9% pace.
Overall durable orders for January may have been affected by
aircraft demand, a category that tends to swing wildly from month
to month, obscuring broader demand in the economy. Major aircraft
maker Boeing Co. reported a sharp decline in orders in January
compared with December.
Other reports point to weaker growth for the factory sector this
year, as sluggish economic growth globally and a strengthening
dollar weigh on U.S. manufacturers. A key purchasing manager's
index fell to 53.5 in January from 55.1 in December, suggesting the
sector continues to grow but at a slower pace from late last year,
according to the Institute for Supply Management.
U.S. industrial production rose modestly in January, with
manufacturing output up a slight 0.2%, the Federal Reserve said
earlier this month.
Write to Josh Mitchell at joshua.mitchell@wsj.com
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