WASHINGTON Dec 22 New orders for U.S.-made
capital goods rose more than expected in November amid strong
demand for machinery and primary metals, suggesting some of the
oil-related drag on manufacturing was starting to fade.
The Commerce Department said on Thursday that non-defense
capital goods orders excluding aircraft, a closely watched proxy
for business spending plans, increased 0.9 percent after an
unrevised 0.2 percent gain in October.
There were increases in orders for electrical equipment,
appliances and components, as well as computers and electronic
products. Economists polled by Reuters had forecast these
so-called core capital goods rising 0.3 percent in November.
A collapse in oil prices last year, together with a surge in
the dollar, pressured manufacturing. Much of the impact has been
through weak business spending on equipment, which has
contracted for four consecutive quarters.
But with oil prices hovering above $50 per barrel,
manufacturing, which accounts for 12 percent of the U.S.
economy, is starting to perk up. Gas and oil well drilling has
risen over the last several months.
Economists expect business spending to rebound in 2017,
driven in part by president-elect Donald Trump's perceived
The incoming Trump administration has promised to slash
taxes, remove some regulations and increase infrastructure
spending. But manufacturing gains are likely to be limited by
renewed dollar strength in the wake of Trump's victory.
Since Trump's Nov.8 election victory, the dollar has
increased 4.4 percent against the currencies of the United
States' main trading partner on concerns that the business
mogul's policy agenda could fan inflation.
Shipments of core capital goods rose 0.2 percent last month
after falling 0.3 percent in October. Core capital goods
shipments are used to calculate equipment spending in the
government's gross domestic product measurement.
A 13.2 percent drop in demand for transportation equipment
weighed on overall orders for durable goods, items ranging from
toasters to aircraft that are meant to last three years or more,
which tumbled 4.6 percent last month.
Durable goods orders increased 4.8 percent in October. Last
month's drop reflected a 73.5 percent dive in civilian aircraft
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)