Capital goods orders in US climb by the most in four months

Orders placed with U.S. factories for business equipment rose in January by the most in four months, exceeding forecasts and consistent with resilient capital spending and pointing to steady manufacturing growth.

The value of core capital goods orders, a proxy for investment in equipment that excludes aircraft and military hardware, increased 0.9% after a revised 0.4% gain a month earlier, Commerce Department figures showed on Friday.

Bookings for all durables, or items meant to last at least three years, rose 1.6% in January from the previous month.

The median estimates in a Bloomberg survey of economists called for a 0.3% advance in core capital goods orders and a 1% gain in total bookings of durables.

The pickup extends a trend of steady growth in equipment expenditures that began May 2020 as companies seek to improve efficiency in the face of higher materials and labor costs. Resilient demand for equipment is expected to support factory output and contribute to economic growth.

Still, efforts to production efforts are complicated by shipping bottlenecks as well as shortages of both labor and materials.

Strong Start

Core capital goods shipments, a figure that is used to help calculate equipment investment in the government’s gross domestic product report, climbed 1.9% in January, the most in a year, after rising a revised 1.6% in the prior month.

The figures point to a strong start to first-quarter investment in business equipment. The increase in total durables orders reflected a pickup in bookings for commercial aircraft, computers, machinery and metals.

Bookings for motor vehicles decreased 0.4% after a 1.8% rise in the prior month. Durable goods orders excluding transportation equipment increased 0.7%.

A separate report Friday showed U.S. inflation-adjusted consumer spending rose by more than forecast in January, highlighting the resilience of American demand despite a surge in Covid-19 cases and prices rising by triple the Federal Reserve’s target.

The personal consumption expenditures price index, which the Fed uses for its inflation target, increased 6.1% from January 2021, the most since 1982.