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U.S. Durable Goods Orders Rose in January

Both orders for long-lasting goods and an underlying gauge of business investment rose in January, signaling solid domestic demand is helping buffer the U.S. manufacturing sector against slowing global economic growth.

Overall orders for durable goods, manufactured products intended to last at least three years, increased a seasonally adjusted 0.4% in January from the prior month, the Commerce Department said Wednesday. The gain, marking the third consecutive increase, was driven by a sharp rise in orders for civilian airplanes.

When removing transportation, orders declined at a 0.1% pace.

Michael Pearce, senior U.S. economist at Capital Economics, said taken as a whole, the report was “a bit of a relief” given the downbeat nature of other economic data recently.

An underlying measure of business investment, new orders for nondefense capital goods excluding aircraft, climbed 0.8% from December, the strongest pace since last summer. The increase likely reflects some payback from previous months of declines.

Still, “it suggests investment didn’t fall off a cliff around the turn of the year,” Mr. Pearce said. This, he said, “helps to push back on the notion that the economy caught a cold in December” and is spiraling toward a recession.

More broadly, the durable-orders data runs somewhat against other measures of U.S. manufacturing, which have shown some cooling amid a global slowdown. The Institute for Supply Management said its measure of factory-sector activity weakened in February. U.S. industrial output fell sharply in January because of a large drop in vehicle production, Federal Reserve data show.

Analysts project the first three months of the year will likely show economic cooling from the end of 2018 due to factors including fading fiscal stimulus and heightened trade tensions.

Following Wednesday’s durable-goods report, forecasting firm Macroeconomic Advisers left its estimate for first-quarter gross domestic product growth unchanged at 1.0%, down from its fourth-quarter growth estimate of 2.4%.
Source: Dow Jones

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