U.S. factory orders rise less than expected in December

February 27, 2019

WASHINGTON, (Reuters) – New orders for U.S.-made goods barely rose in December and business spending on equipment was much weaker than previously thought, pointing to a softening in manufacturing activity.

Factory goods orders edged up 0.1 percent, the Commerce Department said on Wednesday, amid declining demand for machinery and electrical equipment, appliances and components.

Data for November was revised slightly up to show factory orders falling 0.5 percent instead of the previously reported 0.6 percent drop. Economists polled by Reuters had forecast factory orders rising 0.5 percent in December.

The release of the report was delayed by a 35-day partial shutdown of the federal government that ended on Jan. 25.

Manufacturing, which accounts for about 12 percent of the economy, is slowing as some of the boost to capital spending from last year’s $1.5 trillion tax cut package fades. In addition, a strong dollar and cooling growth in Europe and China are hurting exports. Lower oil prices are also slowing purchases of equipment for oil and gas well drilling.

In December, orders for machinery dropped 1.0 percent after tumbling 2.0 percent in November. Orders for mining, oil field and gas field machinery plunged 5.2 percent after rising 1.9 percent in November. There were also decreases in orders for industrial machinery as well as turbines, generators and other power transmission equipment in December.

Orders for electrical equipment, appliances and components fell 0.3 percent after dropping 2.6 percent in November. Orders for transportation equipment rose 3.2 percent in December after increasing 3.1 percent in the prior month.

Orders for civilian aircraft and parts jumped 28.4 percent in December. Motor vehicles and parts orders rose 2.4 percent.

The Commerce Department also said December orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, fell 1.0 percent instead of the 0.7 percent drop reported last week.

Orders for these so-called core capital goods declined 1.1 percent in November. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, were unchanged in December instead of the previously reported 0.5 percent increase.

Core capital goods shipments fell 0.2 percent in November.

(Reporting by Lucia Mutikani Editing by Paul Simao)

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