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story.lead_photo.caption Orders for durable goods like these 2019 Tacoma pickups ticked up in January from the previous month.

WASHINGTON -- Orders to U.S. factories for big-ticket manufactured goods edged up slightly in January, but the strength came from a big increase in the volatile aircraft category. In encouraging news for future growth, a key category that tracks business investment plans posted its biggest gain in six months.

Orders for durable goods rose 0.4 percent in January, led by a 15.9 percent rise in orders for commercial aircraft, the Commerce Department reported Wednesday. The category that serves as a proxy for business investment rose 0.8 percent after two months of declines. It was the biggest gain since a 1.5 percent July bump.

The improvement in demand, underscored by orders for machinery and communications equipment, suggests a solid start to the year for manufacturers that should support economic growth in the first quarter. At the same time, other data for February give a more muted picture, with the Institute for Supply Management's factory index falling to a two-year low in February and manufacturers adding the fewest workers since 2017.

The figures showed January's three-month annualized trend for shipments of business equipment increased 1.9 percent after a 1.6 percent gain the previous month, while the trend in orders slipped to a 5.3 percent drop after a 4 percent decline in the previous month.

The weakness in business investment has puzzled economists who expected to see strength in this area as companies increased investment spending to take advantage of new tax breaks.

Orders in the business investment category did show strength at the beginning of last year, immediately after passage in December 2017 of President Donald Trump's $1.5 trillion tax-cut program. But investment orders weakened in the second half of last year.

The overall economy, as measured by the gross domestic product, slowed to a growth rate of 2.6 percent in the October-December period, down from strong gains of 4.2 percent in the second quarter and 3.4 percent in the third quarter of last year. Economists are predicting even more of a slowdown in the current January-March quarter to growth of around 1.5 percent, with part of that weakness reflecting the record 35-day partial government shutdown.

While the economy grew by 2.9 percent for all of 2018, the best showing in three years, analysts are forecasting slower growth this year of around 2.3 percent as the support the economy received last year from the tax cuts and billions of dollars in increased government spending begin to fade.

For January, the 0.4 percent increase in orders for durable goods, items expected to last at least three years, followed a much bigger 1.3 percent jump in December. However, both months were heavily influenced by demand for commercial jetliners, which had surged 35.7 percent in December. Orders for autos and auto parts fell 1 percent in January after a 2 percent December increase.

Excluding transportation-equipment demand, which is volatile and can move wildly on large orders in any given period, orders dropped 0.1 percent after a 0.3 percent increase. Defense capital-goods orders declined 2.3 percent in January.

Orders for primary metals such as steel fell 1.5 percent in January while demand for machinery rose 1.4 percent and orders for computers and related products were up 7.6 percent.

Release of the report on durable goods orders was delayed because of the government shutdown.

Information for this article was contributed by Katia Dmitrieva of Bloomberg News.

Business on 03/14/2019

Print Headline: Orders for durable goods up 0.4%


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