US durable goods orders post first decline in three months

Orders placed with U.S. factories for durable goods fell in December for the first time in three months, pointing to a pause in capital investment at the close of the fourth quarter.

Bookings for all durable goods—or items meant to last at least three years—dropped 0.9% from November, reflecting a drop in orders for commercial aircraft and communications equipment. At the same time, durables orders for November were revised up to a 3.2% gain.

The value of core capital goods orders, a proxy for business investment in equipment that excludes aircraft and military hardware, was little changed after climbing a revised 0.3% in the prior month, Commerce Department figures showed Thursday. 

The median estimate in a Bloomberg survey of economists called for a 0.4% increase in core capital goods orders and a 0.6% decline in total durables bookings. Total durable orders in November were revised up from a 2.6% gain.

The data suggest that limited availability of materials and components due to supply chain constraints and labor shortages tempered business investment growth at the end of the fourth quarter. Higher borrowing costs as the Federal Reserve tightens monetary policy risks more limited capital spending plans over the longer term.

A separate report Thursday showed outlays for business equipment rose an annualized 0.8% in the fourth quarter after a 2.3% decline. The government’s first estimate of the period’s gross domestic product accelerated from the third quarter on the heels of more inventory investment.

The durables report showed bookings for commercial aircraft decreased 14.4%. Boeing Co. reported 80 orders in December, down from 109 a month earlier. 

Orders for motor vehicles rose 1.4% in December. Durable goods orders excluding transportation equipment advanced 0.4%.

Outside of the more volatile transportation categories, the report was mixed. Orders increased for metals and computers, while bookings declined for electrical equipment and machinery.

Unfilled orders for manufactured durable goods, a measure of backlogs, rose 0.5%. Inventories, meantime, increased 0.7%.

Orders for defense capital goods, a volatile component, declined 28.4%, while total durable goods bookings minus military equipment edged up 0.1%.