U.S. Capital Goods Orders Rise by Most in 2 Years

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U.S. capital goods orders rose in January by the most since 2014, signaling a temporary halt in the manufacturing slump.

Orders for non-military equipment (with the exclusion of commercial aircrafts) rose 3.9%, more than economists were projecting and higher than the 3.7% decrease seen in December. Bookings for all durable goods jumped 4.9%. Economists were projecting total orders to rise by 2.9%.

The jump in capital goods orders was broad, which signals that domestic demand is helping support manufacturers that have been hit hard by weak foreign demand. However, the slump in commodity prices is weighing on the forecast for capitalpending among farmers, miners and drillers. Exports will continue to be hurt by a stronger dollar, and cap-ex will likely face challenges over the next few quarters.

Non-defense capital goods shipments (excluding aircraft) fell 0.4% last month. A 0.9% gain was seen in December, its biggest advance since June.

On Friday, the Commerce Department is expected to release its second estimate for the fourth-quarter GDP.

Commercial aircraft bookings surged 54.2%, which helped push the gain. Bookings were down 29.1% the previous month despite industry data showing a rise in plane orders.

Boeing Co. (BA) reported that it received 67 orders in the month of January. The company received 223 orders the previous month, the most in 12 months.

Bookings (excluding transportation equipment demand) jumped 1.8% in January after declining 0.7% in December. Non-defense goods demand climbed 4.5% after dropping 2.5% the previous month.

Machinery orders were up 6.9% last month, the biggest advance in three years. Bookings for parts and motor vehicles was up 3%, and demand for communications equipment saw its strongest advance in nearly two years.

The rise in bookings was accompanied by an increase in sales. Durable goods shipments were up 1.9% in January, which helped factories trim their inventories. Inventories of durable goods dropped 0.1% after rising 0.2% in December.

A slump in oil prices has forced many energy production and exploration companies to cut their investments, and other businesses have reduced spending due to a grim global economic outlook. A 10.5% rise in the dollar over the last year has also made American goods more expensive in overseas market

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